Stele Coatohas authried th following copital stock: Common stock, par value $2 p

Question

Stele Coatohas authried th following copital stock: Common stock, par value $2 per share, 80,000 shares; Preferred stock, 10% $20 par value per share, 15,000 shares. . · During the first year of Steele's operations, the following transactions were completed: Jan 1 Jan 1 July 1 Sept 1 Sold and issued 50,000 shares of common stock for cash at $50 per share. Sold and issued 10,000 shares of preferred stock for $100 per share. Bought back 2,000 shares from a common stockholder for cash at $52 per share. Declared a $1.50 dividend to shareholders of record at Sept. 15 to be paid at Dec. 31 Paid the dividend declared on Sept. 1. Dec 31 Required Journalize the above transactions

Explanation / Answer

Journal entries:

Jan 1 Cash(50000×$50) 2,500,000 Common stock(50000×2) $100,000 Paid in capital-common stock(50000×48) $2,400,000 (To record issue of common stock) Jan 1 Cash(10000×$100) $1,000,000 Preferred stock(10000×$20) $200,000 Paid in capital-preferred stock(10000×$80) $800,000 (To record issue of preferred stock) July 1 Treasury stock(2000×$52) $104,000 Cash $104,000 (To record the purchase of Treasury stock) Sep. 1 Retained earnings(128000×$1.50) $192,000 Dividend payable $192,000 (To record the dividend declared) Dec 31 Dividend payable $192,000 Cash $192,000 (To record the dividend paid)

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