Problem 13-6A. Irwin Corporation has been authorized to issue 21,00 shares of $1
ID: 2445701 • Letter: P
Question
Problem 13-6A.
Irwin Corporation has been authorized to issue 21,00 shares of $100 par value, 10%, noncumulative preferred stock and 1,087,500 shares of no-par common stock. The corporation assigned a $2.90 stated value to the common stock. At December 3, 2014, the ledger contained the following balances pertaining to stockholders' equity.
The Preferred Stock was issued for land having a fair value of $141,000. All common Stock issued was for cash. In November, 1,200 shares of common stock were purchased for the treasury at a per share cost of $14. In December, 400 shares of treasury stock were sold $15 per share. No dividends were declared in 2014.
A. Prepare the journal entries for the:
(1) Issuance of preferred stock for land.
(2) Issuance of common stock for cash.
(3) Purchase of common treasury stock for cash.
(4) Sale of treasury stock for cash.
b. Prepare the stockholders's equity section at December31, 2014.
Preferred Stock $129,000 Paid-in CApital in EXcess of Par-Preferred Stock 12,100 Common Stock 1,087,500 Paid-in Caapital in Excess of Stated Value-Common Stock 1,983,900 Treasury Stock (800 common shares) 11,200 Paid-in Capital from Treasury Stock 400 Retained Earnings 84,400Explanation / Answer
Answer:-
(1) Issuance of preferred stock for land.
Dr Land 141,000
Cr Preferred Stock 129,000
Cr Paid-in Capital in Excess of Par Value—Preferred 12,000
(2) Issuance of common stock for cash.
Dr Cash 3,071,400
Cr Common Stock 1,087,500
Cr Paid-in Capital in Excess of Stated Value—Common 1,983,900
3) Purchase of common treasury stock for cash.
Dr Treasury Stock 16,800 (1,200 x $14)
Cr Cash 16,800
(4) Sale of treasury stock for cash.
Dr Cash 6,000 (400 x $15)
Cr Common Treasury Stock 5,600 (400 x $14)
Cr Paid-in Capital from Treasury Stock 400
B. Prepare the stockholders’ equity section of the company’s balance sheet as of Dec. 31, 2014.
Noncumulative preferred stock, $100 par value, 2,100 issued
Common stock, $2.90 par value, 1,087,500 shares issued
Additional paid-in capital – common $ 1,983,900
Total contributed capital = $5,347,650
Retained Earnings = $ 84,400
Sub-total $5,432,050
Treasury stock, 800 shares, at cost ($11,200)
Additional paid-in capital – treasury stock $400
Total stockholders’ equity = $5,443,650