Question

A company has the following transactions during the year related to stockholders’ equity.

February 1 Issues 5,000 shares of no-par common stock for $15 per share.
May 15 Issues 500 shares of $10 par value, 7.5% preferred stock for $12 per share.
October 1 Declares a cash dividend of $0.75 per share to all stockholders of record (both common and preferred) on October 15.
October 15 Date of record.
October 31 Pays the cash dividend declared on October 1.
Required:
Record each of these transactions.( omit account numbers and descriptions)
Date Discription Debit Credit

Answer 1

Journal entries are given below

Step-by-step explanation:

February 1

(Issues 5,000 shares of no-par common stock for $15 per share)

DEBIT CREDIT

Cash(5000 x $15) $75,000

Common stock $75,000

May 15

(Issues 500 shares of $10 par value, 7.5% preferred stock for $12 per share)

DEBIT CREDIT

Cash (500x$12) $6,000

Preferred stock (500x$10) $5,000

Additional paid in capital $1,000

October 1

Declares a cash dividend of $0.75 per share

DEBIT CREDIT

Retained Earnings (5500x$0.75) $4,125

Dividend Payable $4,125

October 15 Date of Record

No Entry Required

October 31 Pays the cash dividend

DEBIT CREDIT

Dividend Payable $4,125

Cash $4,125