Coronado Company reported the following amounts in the
stockholders’ equity section of its December 31, 2016, balance
sheet.
Preferred stock, 10%, $100 par (10,000 shares authorized, 1,800 shares issued) | $180,000 | |
Common stock, $5 par (94,000 shares authorized, 18,800 shares issued) | 94,000 | |
Additional paid-in capital | 131,000 | |
Retained earnings | 478,000 | |
Total | $883,000 |
During 2017, Coronado took part in the following transactions
concerning stockholders’ equity.
1. | Paid the annual 2016 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2016. | |
2. | Purchased 1,500 shares of its own outstanding common stock for $43 per share. Coronado uses the cost method. | |
3. | Reissued 800 treasury shares for land valued at $36,200. | |
4. | Issued 540 shares of preferred stock at $104 per share. | |
5. | Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $41 per share. | |
6. | Issued the stock dividend. | |
7. | Declared the annual 2017 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018. |
Journal Entries to record the above transactions (Amounts in $)
No. | Account Titles and Explanations | Debit | Credit |
1 | Dividends Payable-Preferred Stock (1,800 shares*$10) | 18,000 | |
Dividends Payable-Common Stock (18,800 shares*$2) | 37,600 | ||
Cash ($18,000+$37,600) | 55,600 | ||
2 | Treasury Stock (1,500 shares*$43 per share) | 64,500 | |
Cash | 64,500 | ||
3 | Land | 36,200 | |
Treasury Stock (800 shares*$43 per share) | 34,400 | ||
Paid-in Capital From Treasury Stock ($36,200-$34,400) | 1,800 | ||
4 | Cash (540 shares*$104 per share) | 56,160 | |
Preferred Stock (540 shares*$100 par) | 54,000 | ||
Paid-in Capital in excess of par-Preferred (540 shares*$4) | 2,160 | ||
5 | Retained Earning [(18,800-1,500+800) shares*10%*$41] | 74,210 | |
Common Stock Dividend Distributable [(18,800-1,500+800) shares*10%*$5] | 9,050 | ||
Paid-in Capital in excess of par-Common ($74,210-$9,050) | 65,160 | ||
6 | Common Stock Dividend Distributable | 9,050 | |
Common Stock | 9,050 | ||
7 | Retained Earning ($23,400+$39,820) | 63,220 | |
Dividends Payable-Preferred Stock [(1,800+540) shares*$10] | 23,400 | ||
Dividends Payable-Common Stock [(18,800-1,500+800+1,810)*$2] | 39,820 |
Working Notes:-
1) In point 5, stock dividend is calculated by adjusting treasury stock purchased and reissued of 1,500 and 800 respectively.
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