Problem 11-2A (Part Level Submission) The stockholders\' equity accounts of Mart
ID: 2531352 • Letter: P
Question
Problem 11-2A (Part Level Submission) The stockholders' equity accounts of Martinez Corp. on January 1, 2017, were as follows. Preferred Stock (7%, $100 par noncumulative, 5,000 shares authorized) Common Stock ($4 stated value, 300,000 shares authorized) Paid-in Capital in Excess of Par Value-Preferred Stock Paid-in Capital in Excess of Stated Value-Common Stock Retained Eamings Treasury Stock (5,000 common shares) $300,000 1,000,000 15,000 480,000 689,000 40,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders' equity Feb. 1 Issued 5,000 shares of common stock for $30,000. Mar 20 Purchased 1,000 additional shares of common treasury stock at $8 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1 Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017 Dec. 31 Determined that net income for the year was $275,700. Paid the dividend declared on December 1Explanation / Answer
SOLUTION
* Dec.1
No. of shares- 1,000,000 / 4 = 250,000 common shares issued
250,000 - 5,000 = 245,000 common shares outstanding
Total = 245,000 + 5,000 - 1,000 = 249,000 shares
Date Account titles and Explanation Debit ($) Credit ($) Feb.1 Cash 30,000 Common stock (5,000 * $4) 20,000 Paid-in Capital in Excess of Stated Value - Common Stock 10,000 Mar.20 Treasury stock (1,000 * $8) 8,000 Cash 8,000 Oct.1 Retained earnings (300,000 * 7%) 21,000 Dividend payable 21,000 Nov.1 Dividend payable 21,000 Cash 21,000 Dec.1 Retained earnings * (249,000 * $0.50) 124,500 Dividend payable 124,500 Dec.31 Income summary 275,700 Retained earnings 275,700 Dividend payable 124,500 Cash 124,500