Diamondback Welding & Fabrication Corporation sells and services pipe welding eq

Question

Diamondback Welding & Fabrication Corporation sells and services pipe welding equipment in Illinois. The following selected accounts appear in the ledger of Diamondback Welding & Fabrication at the beginning of the current year:

During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows:

a. Purchased 87,500 shares of treasury common for $8 per share.

b. Sold 55,000 shares of treasury common for $11 per share.

c. Issued 20,000 shares of preferred 2% stock at $84.

d. Issued 400,000 shares of common stock at $13, receiving cash.

e. Sold 18,000 shares of treasury common for $7.50 per share.

f. Declared cash dividends of $1.60 per share on preferred stock and $0.05 per share on common stock.

g. Paid the cash dividends.

Required:

Journalize the entries to record the transactions.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Preferred 2% Stock, $80 par (100,000 shares authorized, 60,000 shares issued) $4,800,000 Paid-In Capital in Excess of Par—Preferred Stock 210,000 Common Stock, $9 par (3,000,000 shares authorized, 1,750,000 shares issued) 15,750,000 Paid-In Capital in Excess of Par—Common Stock 1,400,000 Retained Earnings 52,840,000

Explanation / Answer

Workings:

Transaction Accounts Debit Credit a. Treasury stock-Common (87500 x $8) 700000 Cash 700000 (To record purchase of treasury stock-common) b. Cash (55000 x $11) 605000 Treasury stock-Common (55000 x $8) 440000 Paid-in capital from Treasury stock transactions (55000 x $3) 165000 (To record sale of treasury stock-common) c. Cash (20000 x $84) 1680000 Preferred 2% stock (20000 x $80) 1600000 Paid-in capital in excess of par-preferred stock (20000 x $4) 80000 (To record issue of preferred stock) d. Cash (400000 x $13) 5200000 Common stock (400000 x $9) 3600000 Paid-in capital in excess of par-common stock (400000 x $4) 1600000 (To record issue of common stock) e. Cash (18000 x $7.50) 135000 Paid-in capital from Treasury stock transactions (18000 x $0.50) 9000 Treasury stock-Common (18000 x $8) 144000 (To record sale of treasury stock-common) f. Retained earnings 234775 Dividends payable 234775 (To record declaration of cash dividends) g. Dividends payable 234775 Cash 234775 (To record payment of cash dividends)

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.