Question

Pina Colada Corp. has been authorized to issue  20,100 shares of $ 100 par value,  7%, noncumulative preferred stock and  1,110,000 shares of no-par common stock.

The corporation assigned a $ 5 stated value to the common stock. At December 31, 2017, the ledger contained the following balances pertaining to stockholders’ equity.

Preferred Stock		$ 151,000
Paid-in Capital in Excess of Par Value—Preferred Stock		21,100
Common Stock		1,965,000
Paid-in Capital in Excess of Stated Value—Common Stock		1,520,000
Treasury Stock ( 4,100 common shares)		32,800
Retained Earnings		81,100
Accumulated Other Comprehensive Income		49,100

The preferred stock was issued for $ 172,100 cash. All common stock issued was for cash. In November  4,100 shares of common stock were purchased for the treasury at a per share cost of $ 8. No dividends were declared in 2017.

Prepare the journal entries for the following. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(1)		Issuance of preferred stock for cash.
(2)		Issuance of common stock for cash.
(3)		Purchase of common treasury stock for cash.

Answer 1

Date	Account title & explanation		Debit	Credit		No. of shares
			Amount in $	Amount in $
1	Cash		172100			Preferred stock
		Preferred stock at par value-$100		151000		1510
		Paid in capital in excess of par value - Preferred stock		21100
	To record the issuance of preferred stock
2	Cash		3485000			Common stock
		Common Stock at stated value-$5		1965000		393000
		Paid in capital in excess of stated value - Common stock		1520000
	To record the issuance of common stock
3	Treasury Stock		32800			Treasury Common stock
		Cash		32800		4100
	To record the purchase of treasury stock