Prepare entries for stock transactions, and prepare a stockholders\' equity sect
ID: 2475519 • Letter: P
Question
Prepare entries for stock transactions, and prepare a stockholders' equity section. Hartwell Corporation has been authorized to issue 25000 shares of $100 par value, 8%, noncumulative preferred stock and 1000000 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 $400000 Paid-in Capital in Excess of Par Value-Preferred Stock 52000 Common Stock 2400000 Paid-in Capital in Excess of Stated value- Common stock 6600000 Treasury Stock (40000 common shares) 680000 Retained Earnings 3630000 The preferred stock was issued for $452000 cash. All common stock issued was for cash. In November 40000 shares of common stock were purchased for the treasury at a per share cost of $17. No dividends were declared in 2014 Prepare the journal entries for the following Issuance of preferred stock for cash. Issuance of common stock for cash Purchase of common treasury stock for cash Prepare the stockholders equity section of the balance sheet at December 31, 2014.Explanation / Answer
STOCK Holders' Equity: $ $ Preferred stock 400,000 Common Stock 2,400,000 2,800,000 $ Paid-in Capital in Excess of Par Value-Preferred Stock 52,000 Paid-in Capital in Excess of Stated Value-Common Stock 680,000 732,000 Total paid in capital 3,532,000 Retained Earnings 3,630,000 7,162,000 Less- Treasury Stock 680,000 Total Stock Holders' Equity 6,482,000 JOURNAL ENTRIES 1.00 $ $ CASH A/C Dr. 452,000 To Preferred Stock 400,000 To Paid in capital in excess of par value 52,000 (To record issuance of Preferred stock) 2.00 CASH A/C Dr. 9,000,000 To Common Stock 2,400,000 To Paid in capital in excess of par value 6,600,000 (To record issuance of Common stock) 3.00 Treasury Stock A/c Dr. 680,000 To Cash 680,000 ( To record the purchase of 40000 shares@ $17)