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ID: 2564063 • Letter: #
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Required Information The following information applies to the questions displayed below Major League Apparel has two classes of stock authorized: 6%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2018, its first year of operations: January 2 Issue 110,000 shares of common stock for $51 per share. February 14 Issue 41,000 shares of preferred stock for $12 per share. May 8 Repurchase 11,000 shares of its own common stock for $41 per share. May 31 Reissue 5,500 shares of treasury stock for $46 per share. December 1 Declare a cash dividend on its common stock of $0.30 per share and a $24,600 (6% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint. Dividends are not paid on treasury stock.) December 30 Pay the cash dividends declared on December 1Explanation / Answer
1. Date General journal Debit Credit
Jan 2 Cash 5,610,000
Common stock (110,000 X 1) 110,000
Additional paid in capital 5,500,000
Feb 14 Cash (41000 X 12) 492,000
Preferred stock ( 41000 X 10) 410,000
Additional paid in capital 82,000
May 8 Treasurey stock ( 11000 X 41) 451,000
Cash 451000
May 31 Cash (5500 X 46) 253000
Treasurey stock (5500 X 41) 225500
Additional paid in capital 27500
Dec 1 Dividends 55950
Dividends payable 55950
(( 110,000 -11000 +5500 ) X 0.3 + 24,600)
Dec 15 No journal entry required
Dec 30 Dividends payable 55950
Cash 55950
MAJOR LEAGUE APPAREL
BALANCE SHEET
(STOCK HOLDERS EQUITY SECTION)
DECEMBER 31, 2018
STOCK HOLDER'S EQUITY:
Preffered stock 410,000
Common stock 110,000
Additional paid in capital 5609500
(5500000 + 82000 + 27500)
Total paid in capital 6129500
Retained earnings ( 471000 - 55950) 415050
Treasury stock (5500 X 41) (225500)
Total stock holder's equity 6319050
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