Exercise 15-18 (Part Level Submission) Swifty Company reported the following amo

Question

Exercise 15-18 (Part Level Submission) Swifty Company reported the following amounts in the stockholders' equity section of its December 31, 2016, balance heet. Preferred stock, 1096, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000 Common stock, $5 par (101,000 shares authorized, 20,200 shares issued) Additional paid-in capital Retained earnings 101,000 119,000 447,000 $847,000 Total During 2017, Swifty took part in the following transactions concerning stockholders' equity. 1. Paid the annual 2016 $10 per share dividend on preferred stock and a $2 per share dividend on common stock These dividends had been declared on December 31, 2016 2. Purchased 1,500 shares of its own outstanding common stock for $37 per share. Swifty uses the cost method. 3. Reissued 700 treasury shares for land valued at $28,400. 4. Issued 500 shares of preferred stock at $106 per share 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $48 per share. 6. Issued the stock dividend. 7. Declared the annual 2017 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018 Prepare journal entries to record the transactions described above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit

Explanation / Answer

SOLUTION

* (20,200 - 1,500 + 700) * 10% * $48 = $93,120

S.No. Accounts title and Explanations Debit ($) Credit ($) 1. Dividends Payable- Preferred (1,800 * $10) 18,000 Dividends Payable- Common (20,200 * $2) 40,400 Cash 58,400 2. Treasury Stock (1,500 * $37) 55,500 Cash 55,500 3. Land 28,400 Treasury stock (700 * $37) 25,900   Paid-in Capital From Treasury Stock 2,500 4. Cash (500 * $106) 53,000 Preferred stock (500 * $100) 50,000 Paid in capital in excess of par- Preferred stock 3,000 5. Retained earnings (1,940 * $48) 93,120* Common Stock Dividend Distributable (1,940 * $5) 9,700   Paid-in Capital in Excess of Par- common stock 83,420 6. Common Stock Dividend Distributable 9,700 Common stock 9,700 7. Retained Earnings 65,680 Dividends payable- preferred [(1,800 + 500)*$10] 23,000 Dividends payable- Common [(20,200 - 1,500 + 700 + 1.940) * $2] 42,680

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