Answered: (a) On January 31, the board of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Carmen Company is a corporation that has issued both preferred and common stock. As of January 1, it had 50,000 shares of 2.75% $100 par, preferred stock outstanding and 250,000 shares of $10 par common stock outstanding. Journalize the following transactions.

(a) On January 31, the board of directors issues a requirement to purchase 5,000 shares of its common stock at
market price. The shares are purchased at a market price of $22 per share.

(b) On March 15, Carmen declares a dividend on preferred stock of $2.75 per share. The date of record is
March 25 and the date of payment is March 31.

(c) On December 1, Carmen declares a cash dividend on common stock of $0.12 per share. The date of record is
December 15 and the date of payment is December 21.

(d) On December 27, the board orders that 2,500 shares of the treasury stock purchased in (a) be sold. The sale price is $25 per share.

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