National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2021, National League’s first year of operations:February 2 Issue 1.5 million shares of common stock for $35 per share.February 4 Issue 600,000 shares of preferred stock for $23 per share.June 15 Purchase 150,000 shares of its own common stock for $30 per share.August 15 Resell 112,500 shares of treasury stock for $45 per share.November 1 Declare a cash dividend on its common stock of $1.50 per share and a $480,000 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.)November 30 Pay the dividends declared on November 1.Required:1. Record each of these transactions.2. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2021. Net income for the year was $4,900,000.
National League Gear has two classes of stock authorized: 4%, $20 par preferred, and $5 par value common. The following transactions affect
February 2 Issue 1.5 million shares of common stock for $35 per share.
February 4 Issue 600,000 shares of
June 15 Purchase 150,000 shares of its own common stock for $30 per share.
August 15 Resell 112,500 shares of
November 1 Declare a cash dividend on its common stock of $1.50 per share and a $480,000 (4% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.)
November 30 Pay the dividends declared on November 1.
Required:
1. Record each of these transactions.
2. Prepare the stockholders’ equity section of the
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