Problem 11-2A Date Account Titles and Explanation Debit Credit (To record net in
ID: 2709981 • Letter: P
Question
Problem 11-2A
Date
Account Titles and Explanation
Debit
Credit
(To record net income)
(To close cash dividends)
(To record payment of cash dividends payable)
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Preferred Stock
Common Stock
Paid-in Capital in Excess of Par Value—Preferred Stock
Paid-in Capital in Excess of Stated Value—Common Stock
Retained Earnings
Cash Dividends
Treasury Stock
Problem 11-2A
The stockholders’ equity accounts of Miley Corporation on January 1, 2014, were as follows.Preferred Stock (7%, $100 par noncumulative, 4,700 shares authorized) $282,000 Common Stock ($3 stated value, 328,000 shares authorized) 787,200 Paid-in Capital in Excess of Par Value—Preferred Stock 11,280 Paid-in Capital in Excess of Stated Value—Common Stock 262,400 Retained Earnings 689,700 Treasury Stock—(4,700 common shares) 37,600
During 2014, the corporation had the following transactions and events pertaining to its stockholders’ equity.
Feb. 1 Issued 4,600 shares of common stock for $27,600. Mar. 20 Purchased 1,470 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 $0.70 per share cash dividend to common stockholders of record on December 15, payable December 31, 2014. Dec. 31 Determined that net income for the year was $281,000. Paid the dividend declared on December 1.
Explanation / Answer
Answer:
DATE ACCOUNT TITLE & EXPLANATION DEBIT CREDIT Feb-01 By Cash 27600 To Common Stock 13800 (4,600*$3) To Paid-in Capital in Excess of Stated Value—Common Stock 13800 (Being common share issued) Mar-20 By Treasury Stock 11760 To Cash 11760 (1,470*$8) (Being treasury share purchased) Oct-01 By preferred dividend 19740 To Preferred dividend payble 19740 ($282,000*7%) (Being preferred dividend declared) Nov-01 By Preferred dividend payble 19740 To Cash 19740 (Being preferred dividend paid) Dec-01 By Retained Earning 183680 ($787,200/3)*$0.7 To Dividend Payble 183680 (Being equity dividend declared @$0.7 per share) Dec-01 By Dividend payble 183680 To Cash 183680 (Being equity dividend paid)