Question

Coronado Company reported the following amounts in the stockholders’ equity section of its December 31, 2016,...

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.

Homework Answers

Answer #1

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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