Coil Welding Corporation sells and services pipe welding equipment in California
ID: 2435862 • Letter: C
Question
Coil Welding Corporation sells and services pipe welding equipment in California. The following selected accounts appear in the ledger of Coil Welding Corporation on February 1, 2010, the beginning of the current fiscal year:During the year, the corporation completed a number of transactions affecting the stockholders' equity. They are summarized as follows.
Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. Purchased 60,000 shares of treasury common for $540,000.
Account Debit Credit
Treasury Stock
Cash
b. Sold 42,000 shares of treasury common for $462,000.
Account Debit Credit
Cash
Treasury Stock
Paid-In Capital from Sale of Treasury Stock
c. Issued 7,500 shares of preferred 2% stock at $38.
Account Debit Credit
Cash
Preferred Stock
Paid-In Capital in Excess of Par-PReferred Stock
d. Issued 120,000 shares of common stock at $15, receiving cash.
Account Debit Credit
Cash
Common Stock
Paid-In Capital Excess of Par Common Stock
e. Sold 13,000 shares of treasury common for $110,500.
Account DEbit Credit
Cash
Paid-In Capital from Sale of Treasury Stock
Treasury Stock
f. Declared cash dividends of $0.50 per share on preferred stock and $0.42 per share on common stock.
Account Debit Credit
Cash dividends
Cash Dividends Payable
g. Paid the cash dividends.
Account Debit Credit
Cash Dividends Payable
Cash dividends
Explanation / Answer
You forgot to put the balance of selected accounts as on February 1,2010, I am anserwing with the following figures :
Preferred 2% Stock, $25 par
(50,000 shares authorized, 40,000 shares issued) $1,000,000
Paid-In Capital in Excess of Par—Preferred Stock $240,000
Common Stock, $5 par (1,000,000 shares
authorized, 750,000 shares issued) $3,750,000
Paid-In Capital in Excess of Par—Common Stock $6,000,000
Retained Earnings $36,785,000
a. Purchased 60,000 shares of treasury common for $540,000.
Account Debit Credit
Treasury Stock $540,000
Cash $540,000
Acquired 60,000 shares of common stock at $9 per share
_____________________________________________________
b. Sold 42,000 shares of treasury common for $462,000.
Account Debit Credit
Cash $462,000
Treasury Stock $378,000
Paid-In Capital from Sale of Treasury Stock $84,000
To record sale of 42,000 treasury common stock shares at $11 per share
_____________________________________________________________
c. Issued 7,500 shares of preferred 2% stock at $38.
Account Debit Credit
Cash $285,000
Preferred Stock $187,500
Paid-In Capital in Excess of Par-PReferred Stock $97,500
Issued 7,500 Pref. shares at $38 per share
_____________________________________________________________
d. Issued 120,000 shares of common stock at $15, receiving cash.
Account Debit Credit
Cash $1,800,000
Common Stock $600,000
Paid-In Capital Excess of Par Common Stock $1,200,000
Issued 120,000 common stock shares at $15 per share
_______________________________________________________________
e. Sold 13,000 shares of treasury common for $110,500.
Account Debit Credit
Cash $110,500
Paid-In Capital from Sale of Treasury Stock $6,500
Treasury Stock $117,000
To record sale of 13,000 treasury common stock shares at $8.50 per share
_________________________________________________________________
f. Declared cash dividends of $0.50 per share on preferred stock and $0.42 per share on common stock.
Account Debit Credit
Cash dividends $363,950
Cash Dividends Payable $363,950
To record preference dividend (40,000 +7,500) x $0.50 and
common stock dividend (750,000-60,000+120,000) x $0.42
________________________________________________________________
g. Paid the cash dividends.
Account Debit Credit
Cash Dividends Payable $363,950
Cash dividends $363,950
To record payment of dividends to shareholders
____________________________________________________________