National League Gear has two classes of stock authorized: 5%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2021, National League’s first year of operations: February2 Issue 1.3 million shares of common stock for $33 per share. February4 Issue 580,000 shares of preferred stock for $24 per share.June15 Purchase 130,000 shares of its own common stock for $28 per share.August15 Resell 97,500 shares of treasury stock for $43 per share. November1 Declare a cash dividend on its common stock of $1.30 per share and a $580,000 (5% 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.) November30 Pay the dividends declared on November 1. Required:1. Record each of these transactions

When stock is issued at rice higher than its par value, they are said to be issued at premium.Date Accounts & Explanation Debit Credit 2-Feb Cash(1500000*33) 49500000 Common stock (1500000*5) 7500000 Paid in capital in excess of par-common stock 42000000 To record issue of 1.5 million common share 4-Feb Cash(580000*24) 13920000 Preferred stock (580000*20) 11600000 Paid in capital in excess of par-preferred stock 2320000 To record issue of 580000 preferred share 15-Jun Treasury stock (130000*28) 3640000 Cash 3640000 To record purchase of treasury stock 15-Aug Cash (97500*43) 4192500 Treasury stock (97500*28) 2730000 Paid in capital in excess of common stock 1462500 To record issue of treasury stock 1-Nov Retained earnings (1500000-130000+97500)*1.30 +580000 2487750 Dividend payable-common stock 1907750 Dividend payable-preferred stock 580000 To record declaration of dividend 30-Nov Dividend payable-common stock 1907750 Dividend payable-preferred stock 580000 Cash 2487750 To record payment of dividend

Answered: National League Gear has two classes 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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National League Gear has two classes of stock authorized: 5%, $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 1.3 million shares of common stock for $33 per share.
February	4	Issue 580,000 shares of preferred stock for $24 per share.
June	15	Purchase 130,000 shares of its own common stock for $28 per share.
August	15	Resell 97,500 shares of treasury stock for $43 per share.
November	1	Declare a cash dividend on its common stock of $1.30 per share and a $580,000 (5% 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

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