Cullumber Company reported the following amounts in the stockholders\' equity se
ID: 2607753 • Letter: C
Question
Cullumber Company reported the following amounts in the stockholders' equity section of its December 31, 2016, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,900 shares issued) $190,000 Common stock, $5 par (101,000 shares authorized, 20,200 shares issued) Additional paid-in capital Retained earnings 101,000 125,000 31,000 $847,000 Total During 2017, Cullumber 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 1,800 shares of its own outstanding common stock for $43 per share. Cullumber uses the cost method. 3. Reissued 700 treasury shares for land valued at $31,600 4. Issued 530 shares of preferred stock at $104 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $47 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. Question 1 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 1. Debit Credit 2. 3.Explanation / Answer
Answer
S. No.
Particulars
Dr. $
Cr. $
1
Dividend Payable – Preferred Stock (1900 Shares * $10)
19,000
Dividend Payable – Common Stock(20,200 Shares * $2)
40,400
Bank
59,400
(Being Dividend Declared paid)
2
Treasury Stock(1800 Shares * $43)
77,400
Bank
77,400
(Being 1800 own Shares purchased @$43 per share)
3
Land
31,600
Treasury Stock (700 Shares * $43)
30,100
Additional Paid-in-capital – Treasury Stock
1,500
4
Bank (530 shares @ $104)
55,120
Preference Capital (530 shares @ $100)
53,000
Additional Paid-in-capital – Preference Stock
(530 shares @ $4)
2,120
(Being preference shares issued at premium)
5
Retained Earnings (1910 shares @47)
94,940
Common Stock Dividend distributable (2020 shares @5)
10,100
Additional Paid in capital
84,840
(Being 10% stock dividend declared)
6
Common Stock Dividend distributable
10,100
Common Stock
10,100
(Being Stock dividend paid)
7
Dividend on Common Stock (21,010 Shares @ $2)
42,020
Dividend payable
42,020
(Being dividend on Common shares declared)
Dividend on Preference Stock (2430 Shares @ $10)
24,300
Dividend payable
24,300
(Being dividend on preference shares declared)
Preference Stock at the end = Opening + Issued
= 1900 + 530 shares
= 2,430 Shares
Common stock at the time of Stock Dividend = Opening - purchased + Reissued
= 20,200 – 1,800 + 700
= 19,100 Shares
Stock Dividend = 10% * 19,100 Shares = 1,910 Shares
Common Stock at the time of end Dividend = 19,100 shares + 1,910 Shares
= 21,010 Shares.
S. No.
Particulars
Dr. $
Cr. $
1
Dividend Payable – Preferred Stock (1900 Shares * $10)
19,000
Dividend Payable – Common Stock(20,200 Shares * $2)
40,400
Bank
59,400
(Being Dividend Declared paid)
2
Treasury Stock(1800 Shares * $43)
77,400
Bank
77,400
(Being 1800 own Shares purchased @$43 per share)
3
Land
31,600
Treasury Stock (700 Shares * $43)
30,100
Additional Paid-in-capital – Treasury Stock
1,500
4
Bank (530 shares @ $104)
55,120
Preference Capital (530 shares @ $100)
53,000
Additional Paid-in-capital – Preference Stock
(530 shares @ $4)
2,120
(Being preference shares issued at premium)
5
Retained Earnings (1910 shares @47)
94,940
Common Stock Dividend distributable (2020 shares @5)
10,100
Additional Paid in capital
84,840
(Being 10% stock dividend declared)
6
Common Stock Dividend distributable
10,100
Common Stock
10,100
(Being Stock dividend paid)
7
Dividend on Common Stock (21,010 Shares @ $2)
42,020
Dividend payable
42,020
(Being dividend on Common shares declared)
Dividend on Preference Stock (2430 Shares @ $10)
24,300
Dividend payable
24,300
(Being dividend on preference shares declared)
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