Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, an

Question

Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2015, its first year of operations:

1) Issues 100,000 shares of common stock for $17 per share. Record the transaction.

2) Issues 1,200 shares of 8% preferred stock for $12 per share. Record the transaction.

3) Repurchases 10,000 shares of its own common stock for $22 per share. Record the transaction.

4) Reissues 5,000 shares of treasury stock at $27 per share. Record the transaction.

Finishing Touches has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2015, its first year of operations:

January   2   Issues 100,000 shares of common stock for $17 per share. February   6   Issues 1,200 shares of 8% preferred stock for $12 per share. September 10   Repurchases 10,000 shares of its own common stock for $22 per share. December 15   Reissues 5,000 shares of treasury stock at $27 per share.

Explanation / Answer

Date Title Debit credit jan 2 cash   (100000*17) 1,700,000 common stock   (100,000 *1) 100,000 Additional paid in capital-common stock 1,600,000 [Being common stock issued] feb6 Cash (1200*12) 14400 preferred stock (1200*10) 12000 Additional paid in capital -preferred stock 2400 [beinf preferred stock issued] sep 10 Treasury stock 220000 cash (10000*22) 220000 [being stock repurchased] dec 15 Cash (5000*27) 135000 Treasury stock   (5000*22) 110000 Additional paid in capital-treasury stock 25000

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