Answer:
February 1
Dr Cash 70,400
Cr Common stock 70,400
( to record the issuance of 4,400 no-par value common shares at $16 each)
May 15
Dr Cash 10,400
Cr Preferred stock 8,000
Cr Paid-in capital - preferred stock 2,400
( to record the issuance of 800 $10-par-value preferred shares at $13 each)
October 1
Dr Retained Earnings 2,340
Cr Dividend Payable - Common stock 1,980
Cr Dividend Payable- Preferred stock 360
( to record dividend declaration)
Oct 15: No entry required
October 31st
Dr Dividend Payable - Common stock 1,980
Dr Dividend Payable- Preferred stock 360
Cr Cash 2,340
( to record dividend payment)
Explanation:
Further Working notes:
* May 15: Actual cash receipt = issued price per share x share issuance = 13 x 800 = $10,400; Amount recorded in Preferred stock account = par value per share x share issuance = 10 x 800 = $8,000; Amount recorded in Paid-in capital account = (Issue price - Par value) x No of shares issuance = (13-10) x 800 = $2,400.
* Oct 1: Actual dividend paid out = Dividend paid to preferred stockholders + Dividend paid to common stock holders = 0.45 x 800 + 0.45 x 4,400 = $360 + $1,980 = $2,340.
