Preferred Stock (796, $100 par noncumulative, 5,000 shares authorized) Common St
ID: 2591812 • Letter: P
Question
Preferred Stock (796, $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 Earnings Treasury Stock (5,000 common shares) 1,000,000 15,000 480,000 688,000 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 $0.85 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 $278,800. Paid the dividend declared on December 1.Explanation / Answer
7% Preferred Stock
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
300,000
Dec 31
To bal. c/d
300,000
Total
300,000
Total
300,000
Common Stock
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
1,000,000
Feb 1
By bank(5000*4)
20,000
Dec 31
To bal. c/d
1,020,000
Total
1,020,000
Total
1,020,000
Paid in capital in excess of Par – Preferred Stock
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
15,000
Dec31
To bal. c/d
15,000
Total
15,000
Total
15,000
Paid in capital in excess of Par – Common Stock
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
480,000
Feb 1
By Bank(5000*2)
10,000
Dec 31
To bal. c/d
490,000
Total
490,000
Total
490,000
Retain earnings
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
688,000
Oct 1
To Cash Dividend (300,000*7%)
21,000
Dec 1
To Cash Dividend
(249,000 * $0.85)
211,650
Dec 31
By P&L (Profit)
278,800
Dec 31
To bal. c/d
734,150
Total
734,150
Total
734,150
Cash Dividend
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
Nov 1
To bank
21,000
Oct 1
By Retain earnings (Preference)
21,000
Dec 31
To bank
211,650
Dec 1
By Retain Earnings(Equity)
211,650
Total
232,650
Total
232,650
Treasury Stock
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d (5000 shares)
40,000
March 20
By bank(1000*8)
8,000
Dec 31
To bal. c/d
48,000
Total
48,000
Total
48,000
Shares on 15 Dec = Opening Shares + issued – Treasury Stock
= (1,000,000/$4) + 5,000 – [5,000(opening) + 1,000(Purchased)]
Shares on 15 Dec = 249,000 shares
Date
Particulars
(Dr. $)
Date
Particulars
(Cr. $)
By Bal. b/d
300,000
Dec 31
To bal. c/d
300,000
Total
300,000
Total
300,000