Chapter 20, Problem 6SPA

PAR AND NO-PAR, COMMON AND PREFERRED STOCK Hernandez Company had the following stock transactions during its first 5 years of operations:

1. (a) Issued 25,000 shares of $1 par common stock for $25,000 cash.
2. (b) Issued 20,000 shares of $1 par common stock for $22,000 cash.
3. (c) Issued 2,000 shares of $50 par, 8% preferred stock for $100,000 cash.
4. (d) Issued 1,000 shares of $50 par, 8% preferred stock for $51,500 cash.
5. (e) Issued 2,500 shares of no-par common stock for $11,875 cash.
6. (f) Issued 1,500 shares of no-par, $7 preferred stock for $72,000 cash.

REQUIRED

1. 1. Prepare general journal entries for these transactions, identifying each by letter.
2. 2. Assume that stock transactions a, b, and c occurred in year 1. The amount available for dividends at the end of year 1 is $26,000. Prepare the dividend allocation between the preferred and common shares in total and per share for year 1.