1. Record Journal Entries for each 2016 transaction. Armstrong Corporation start
ID: 2569852 • Letter: 1
Question
1. Record Journal Entries for each 2016 transaction.
Armstrong Corporation started business on January1,2015. The board of directors authorized the following classes of stock: 6% Cumulative preferred stock. $30 par value Authorized: 60,000 Authorized: 250,000 The following transactions occurred during 2015 Common Stock - S1 par value 3/2/15 6/23/15 10/1/15 Issued 116,000 shares of common stock at $12 per share Issued 22,000 shares of preferred stock at a market price of $30. The dividend is payable semiannually on 9/1 and 3/1 beginning 9/1/15 Purchased 7,000 shares of treasury stock at $10 per share Paid the semiannual dividend on the 6% preferred stock. Purchased 15,000 shares of treasury stock at S11 per share Recorded a net loss of $264,600 12/31/15 The following transactions occurred during 2016 1/20/16 2/15/16 Sold 9,800 of treasury stock at a market price of S13. Armstrong uses the weighted average method to account for treasury stock. Declared a dividend of S.52 per common share Paid the semiannual dividend on the 6% preferred stock and the common stock dividend declared on 2/15 Purchased 6,000 shares of treasury stock at a market price of $11 per share Declared a 5% stock dividend on common shares outstanding when the market value of the stock was S11 per share Paid the semiannual dividend on the 6% preferred stock. Issued 45,000 shares of common stock at a market price of $14 per share Recorded a net loss of S375,400 for fiscal year 2016 8/15/16 10/15/16 12/31/16Explanation / Answer
Solution:
Journal Entries
Date
General Journal
Debit
Credit
1/1/2015
Cash (116,000 Shares x $12)
$1,392,000
Common Stock (116,000 Shares x 1)
$116,000
Pain in Capital in Excess of Par - Common Stock
$1,276,000
3/2/2015
Cash (22,000 Shares x $30)
$660,000
Preferred Stock (22,000 Shares x 30)
$660,000
6/23/2015
Treasury Stock (7,000 Shares x $10)
$70,000
Cash
$70,000
9/1/2015
Preferred Stock Dividend (22,000 x $30 * 6%*1/2)
$19,800
Cash
$19,800
10/1/2015
Treasury Stock (15000 Shares x $11)
$165,000
Cash
$165,000
12/31/2015
Retained Earnings
$264,600
Income Summary
$264,600
1/20/2016
Cash (9800*13)
$127,400
Treasury Stock (at cost refer calculation below)
$100,800
Additional Paid In Capital - Treasury Stock
$26,600
(Cost of Treasury Stock 7,000 Shares from 6/23/15 @ $10 + 2,800 Shares from 10/1/15 @ $11 = $100,800)
2/15/2016
Retained Earnings (103,800 Shares x 0.52)
$53,976
Cash Dividend Payable
$53,976
(Common Stock outstanding = 116,000 Shares - 7,000 - 15,000 + 9800 = 103,800 Shares)
3/1/2016
Preferred Stock Dividend
$19,800
Cash
$19,800
3/1/2016
Cash Dividend Payable
$53,976
Cash
$53,976
8/1/2016
Treasury Stock (6000* $11)
$66,000
Cash
$66,000
8/15/2016
Retained Earnings (4,890 Shares*$11
$53,790
Common Stock (4,890*$1)
$4,890
Paid in Capital in Excess of Par - Common Stock
$48,900
(Outstanding Shares = 103,800 Shares - 6000 = 97,800 Shares)
(Share of Stock Dividend = 97,800*5% = 4,890 Shares)
9/1/2016
Preferred Stock Dividend
$19,800
Cash
$19,800
10/15/2016
Cash (45000 Shares x $14)
$630,000
Common Stock
$45,000
Paid in Capital in Excess of Par - Common Stock
$585,000
12/31/2016
Retained Earnings
$375,400
Income Summary
$375,400
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Date
General Journal
Debit
Credit
1/1/2015
Cash (116,000 Shares x $12)
$1,392,000
Common Stock (116,000 Shares x 1)
$116,000
Pain in Capital in Excess of Par - Common Stock
$1,276,000
3/2/2015
Cash (22,000 Shares x $30)
$660,000
Preferred Stock (22,000 Shares x 30)
$660,000
6/23/2015
Treasury Stock (7,000 Shares x $10)
$70,000
Cash
$70,000
9/1/2015
Preferred Stock Dividend (22,000 x $30 * 6%*1/2)
$19,800
Cash
$19,800
10/1/2015
Treasury Stock (15000 Shares x $11)
$165,000
Cash
$165,000
12/31/2015
Retained Earnings
$264,600
Income Summary
$264,600
1/20/2016
Cash (9800*13)
$127,400
Treasury Stock (at cost refer calculation below)
$100,800
Additional Paid In Capital - Treasury Stock
$26,600
(Cost of Treasury Stock 7,000 Shares from 6/23/15 @ $10 + 2,800 Shares from 10/1/15 @ $11 = $100,800)
2/15/2016
Retained Earnings (103,800 Shares x 0.52)
$53,976
Cash Dividend Payable
$53,976
(Common Stock outstanding = 116,000 Shares - 7,000 - 15,000 + 9800 = 103,800 Shares)
3/1/2016
Preferred Stock Dividend
$19,800
Cash
$19,800
3/1/2016
Cash Dividend Payable
$53,976
Cash
$53,976
8/1/2016
Treasury Stock (6000* $11)
$66,000
Cash
$66,000
8/15/2016
Retained Earnings (4,890 Shares*$11
$53,790
Common Stock (4,890*$1)
$4,890
Paid in Capital in Excess of Par - Common Stock
$48,900
(Outstanding Shares = 103,800 Shares - 6000 = 97,800 Shares)
(Share of Stock Dividend = 97,800*5% = 4,890 Shares)
9/1/2016
Preferred Stock Dividend
$19,800
Cash
$19,800
10/15/2016
Cash (45000 Shares x $14)
$630,000
Common Stock
$45,000
Paid in Capital in Excess of Par - Common Stock
$585,000
12/31/2016
Retained Earnings
$375,400
Income Summary
$375,400
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