A department store chain has two classes of stock authorize: $100 par preferred and $1 par common. As of the beginning of the year, 1,000 shares of common stock and no preferred shares have been issued. The following transactions affect stockholders' equity during the year. January 15: Issue 2,000 additional shares of common stock for $20 per share. February 1: Issue 100 shares of preferred stock for $110 per share. Declare a cash dividend of $5 per share on preferred share on preferred stock and $1 per share on common stock to all stockholders of record on June 15. June 1: June 30: Pay the cash dividend declared on June 1. October 1: Purchase 200 shares of treasury stock for $25 per share. November 1: Resell 100 shares of the treasury stock purchased on October 1 for $28 per share. Required: a. Record each transaction. b. Indicate whether each transaction increases (+), decreases (-), or has no effect (NE), on total assets, total liabilities, and total stockholders' equity.
A department store chain has two classes of stock authorize: $100 par preferred and $1 par common. As of the beginning of the year, 1,000 shares of common stock and no preferred shares have been issued. The following transactions affect stockholders' equity during the year. January 15: Issue 2,000 additional shares of common stock for $20 per share. February 1: Issue 100 shares of preferred stock for $110 per share. Declare a cash dividend of $5 per share on preferred share on preferred stock and $1 per share on common stock to all stockholders of record on June 15. June 1: June 30: Pay the cash dividend declared on June 1. October 1: Purchase 200 shares of treasury stock for $25 per share. November 1: Resell 100 shares of the treasury stock purchased on October 1 for $28 per share. Required: a. Record each transaction. b. Indicate whether each transaction increases (+), decreases (-), or has no effect (NE), on total assets, total liabilities, and total stockholders' equity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem #1:
A department store chain has two classes of stock authorize: $100 par preferred and $1 par common. As
of the beginning of the year, 1,000 shares of common stock and no preferred shares have been issued.
The following transactions affect stockholders' equity during the year.
January 15: Issue 2,000 additional shares of common stock for $20 per share.
February 1: Issue 100 shares of preferred stock for $110 per share.
June 1:
Declare a cash dividend of $5 per share on preferred share on preferred stock and $1
per share on common stock to all stockholders of record on June 15.
June 30:
Pay the cash dividend declared on June 1.
October 1: Purchase 200 shares of treasury stock for $25 per share.
November 1: Resell 100 shares of the treasury stock purchased on October 1 for $28 per share.
Required:
a.
Record each transaction.
b. Indicate whether each transaction increases (+), decreases (-), or has no effect (NE), on total
assets, total liabilities, and total stockholders' equity.
Account
Dr.
Cr.
1/15
Account
Dr.
Cr.
2/1
Account
Dr.
Cr.
6/1
Calculation
Аccount
Dr.
Cr.
6/30
Аccount
Dr.
Cr.
10/1
Account
Dr.
Cr.
11/1
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