Chart of Accounts Labels and Amount Descriptions General Journal Instructions An
ID: 2401799 • Letter: C
Question
Chart of Accounts Labels and Amount Descriptions General Journal Instructions Andrew Company was incorporated on January 1, 2016, under a corporate charter that authorized the issuance of 50,000 shares of $5 par common stock and 20,000 shares of $100 par 8% preferred stock The following events occurred during 2016. Andrew wants to record the events and develop financial statements on December 31, 2016. a Issued for cash 10,000 shares of common stock at $25 per share and 1,000 shares of preferred stock at $105 per share on January 15, 2016 b. Acquired a patent on Apri 1 in exchange for 2,000 shares of common stock. At the time of the exchange, the common stock was selling on the ocal stock exchange for $32 per share c Repurchased 3,000 shares of common stock on May 1 at $20 per share. The corporation is holding the stock to be used for an employee bonus plan. d Declared a cash dividend of S2 per share to common stockholders and an 8% diidend to preferred stockholders on July 1 The preferred stock s noncumulative, nonparticipating The dividend will be distributed on August 1 e Distributed the cash dividend on August 1Explanation / Answer
date
explanation
debit
credit
1-
cash
355000
common stock
50000
preferred stock
100000
additional paid in capital-common stock
200000
additional paid in capital-preferred stock
5000
2-
patent
64000
common stock
10000
additional paid in capital
54000
3-
cash
60000
treasury stock
60000
4-
retained dividend
26000
dividend payable
18000
preferred dividend payable
8000
5-
dividend payable
26000
preferred dividend payable
8000
cash
18000
6-
retained earning
12800
preferred stock
10000
additional paid in capital-preferred stock
2800
2-
Equity section of balance sheet
Common stock
60000
preferred stock
110000
additional paid in capital-common stock
200000
additional paid in capital-preferred stock
7800
treasury stock
-60000
retained earnings
227000-26000-12800
188200
total of share holders equity
506000
3-
Book value per share of equity
total of shareholders equity
506000
less preferred stock at par
110000
book value of common stock
396000
no of common stock outstanding
10000+2000-3000
9000
book value per common share
396000/9000
44
date
explanation
debit
credit
1-
cash
355000
common stock
50000
preferred stock
100000
additional paid in capital-common stock
200000
additional paid in capital-preferred stock
5000
2-
patent
64000
common stock
10000
additional paid in capital
54000
3-
cash
60000
treasury stock
60000
4-
retained dividend
26000
dividend payable
18000
preferred dividend payable
8000
5-
dividend payable
26000
preferred dividend payable
8000
cash
18000
6-
retained earning
12800
preferred stock
10000
additional paid in capital-preferred stock
2800
2-
Equity section of balance sheet
Common stock
60000
preferred stock
110000
additional paid in capital-common stock
200000
additional paid in capital-preferred stock
7800
treasury stock
-60000
retained earnings
227000-26000-12800
188200
total of share holders equity
506000
3-
Book value per share of equity
total of shareholders equity
506000
less preferred stock at par
110000
book value of common stock
396000
no of common stock outstanding
10000+2000-3000
9000
book value per common share
396000/9000
44