1. Northwest Clothing Supply has the following transactions during the year rela

Question

1. Northwest Clothing Supply has the following transactions during the year related to stockholders' equity January 1 Issues 3,000 shares of no-par common stock for $20 per share. March 15Issues 800 shares of $20 par value preferred stock for $22 per share. December 1 Declares a cash dividend of S1 per share to all stockholders of record (both common and preferred) on October 15. December 15 Date of record. December 31 Pays the cash dividend declared on October 1. Record each of these transactions as journal entries. Create Journal Entries for Jan 1-Dec. 31st transactions.

Explanation / Answer

Journal entry Date Account Titles and Explanation Debit Credit January.1 Cash $60,000 Common stock - no par value $60,000 (recording of issue of 3000 shares of no par common stock @ $20 per share) March.15 Cash $17,600 Preferred Stock $16,000 Additional Paid in Capital - Preferred stock $1,600 (recording of issue of 800 shares of $20 par value preferred stock @ $22 per share) December.1 Retained Earnings $3,800 Dividend Payable - Common stock $3,000 Dividend Payable - Preferred Stock $800 (recording of dividend declared for all stockholders at $1 per share) December.15 No Journal Entry December.31 Dividend Payable - Common stock $3,000 Dividend Payable - Preferred Stock $800 Cash $3,800 (recording of dividend paid)

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