Question

The Golden Mushroom has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2024, its first year of operations:

January 2 Issues 100,000 shares of common stock for $22 per share.

February 6 Issues 1,700 shares of 9% preferred stock for $11 per share. September 10 Purchases 11,000 shares of its own common stock for $27 per share. December 15 Resells 5,500 shares of treasury stock at $32 per share.

Required:

Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

To record each of the transactions, debit and credit entries need to be made for cash, common stock, preferred stock, treasury stock, and additional paid-in capital.

Step-by-step explanation:

Record each of these transactions:

January 2: Debit Cash $2,200,000, and credit Common Stock $1,000,000 at par value, and Credit Additional Paid-in Capital—Common Stock $1,200,000.

February 6: Debit Cash $18,700 and Credit 9% Preferred Stock $18,700.

September 10: Debit Treasury Stock $297,000 and Credit Cash $297,000.

December 15: Debit Cash $176,000, and Credit Treasury Stock $154,000 and Credit Additional Paid-in Capital—Treasury Stock $22,000.

Answer 2

Journal entries are provided for each of The Golden Mushroom's stock transactions including issuing common and preferred stock, purchasing treasury stock, and selling treasury stock. The entries are explained using debit and credit notations along with calculation breakdowns.

Step-by-step explanation:

The student's question relates to recording various stock transactions for The Golden Mushroom company. I will provide a breakdown of the journal entries for each transaction listed in the question:

• January 2: Issued 100,000 shares of common stock at $22 per share.
  Debit Cash $2,200,000 (100,000 shares × $22)
  Credit Common Stock $100,000 (100,000 shares × $1 par)
  Credit Additional Paid-In Capital, Common Stock $2,100,000 ($2,200,000 - $100,000)
• February 6: Issued 1,700 shares of 9% preferred stock at $11 per share.
  Debit Cash $18,700 (1,700 shares × $11)
  Credit Preferred Stock $17,000 (1,700 shares × $10 par)
  Credit Additional Paid-In Capital, Preferred Stock $1,700 ($18,700 - $17,000)
• September 10: Purchased 11,000 shares of its own common stock at $27 per share.
  Debit Treasury Stock $297,000 (11,000 shares × $27)
  Credit Cash $297,000
• December 15: Resold 5,500 shares of treasury stock at $32 per share.
  Debit Cash $176,000 (5,500 shares × $32)
  Credit Treasury Stock $148,500 (5,500 shares × $27)
  Credit Paid-In Capital from Treasury Stock $27,500 ($176,000 - $148,500)