Prepare entries for stock transactions, and prepare a stockholders\' equity sect
ID: 2456000 • Letter: P
Question
Prepare entries for stock transactions, and prepare a stockholders' equity section.
(LO 2, 3, 4, 7), AP
Instructions
1.
2.
3.
Prepare the stockholders' equity section of the balance sheet at December 31, 2014.
P11-5BPrepare entries for stock transactions, and prepare a stockholders' equity section.
(LO 2, 3, 4, 7), AP
Hartwell Corporation has been authorized to issue 25,000 shares of $100 par value, 8%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $4 stated value to the common stock. At December 31, 2014, the ledger contained the following balances pertaining to stockholders' equity. Preferred Stock $??400,000 Paid-in Capital in Excess of Par Value—Preferred Stock 52,000 Common Stock 2,400,000 Paid-in Capital in Excess of Stated Value—Common Stock 6,600,000 Treasury Stock (40,000 common shares) 680,000 Retained Earnings 3,630,000 The preferred stock was issued for $452,000 cash. All common stock issued was for cash. In November 40,000 shares of common stock were purchased for the treasury at a per share cost of $17. No dividends were declared in 2014.Instructions
1. Prepare the journal entries for the following.1.
Issuance of preferred stock for cash.2.
Issuance of common stock for cash.3.
Purchase of common treasury stock for cash. 2.Prepare the stockholders' equity section of the balance sheet at December 31, 2014.
Tot. stockholders' equity $12,402,000Explanation / Answer
1.(1) Journal Entry for issuance of prefferd stock for cash
Cash A/c Dr. $452000
To Preffered stock $400000
To additional paid-in capital-preffed stock $52000
(2) Journal Entry for issuance of common stock for cash
Cash A/c Dr. $9000,000
To Preffered stock $2400,000
To additional paid-in capital-preffed stock $6600,000
(3) Journal entry for purchase of Treasury stock
Treasury Stock A/c Dr. $680,000
To Cash A/c $680,000
2. Statement of stockholder's equity
Particulars Amount ($) Common stock 2400000 Preffered stock 400000 Additional paid in capital-preffered 52000 Additional paid in capital 6600000 Reatained Earnings 3630000 Less: Treasury stock 680000 Total 12402000