Answer and Explanation:
The journal entries are shown below:
On Mar 1
Cash (2,200 × $17) $37,400
To Common Stock (2,200 × $1) $2,200
To Paid in capital in excess of par - Common stock (2,200 × $16) $35,200
(Being the issuance of the common stock is recorded)
On April 1
Cash (150 × $32) $4,800
To Preferred stock (150 × $10) $1,500
To Paid in capital in excess of par - Preferred stock (150 × $22) $3,300
(Being the issuance of the preferred stock is recorded)
O Jun 1
Dividends $2,820
Dividends payable $2,820
(Being the dividends declared is recorded)
On June 30
Dividends payable $2,820
To Cash $2,820
(Being the dividends paid is recorded)
On Aug 1
Treasury stock (250 × $14) $3,500
To Cash $3,500
(Being the treasury stock is recorded)
On Oct 1
Cash (150 × $16) $2,400
To Treasury stock (150 × $14) $2,100
To Paid in capital in excess of par -Treasury stock (150 × $2) $300
(Being the reissue of treasury stock is recorded)
The computation of the dividend is shown below:
For common stock
= (2,200 + 2,200) × $0.60
= 4,400 × $0.60
= $2,640
For preferred stock
= (150 + 150) × $0.60
= $180
Total dividends is
= $2,640 +$180
= $2,820
The companies issue common shares, preferred shares, and treasury stock for the purpose of increasing its capital for the business expansion or to cope up with the market situations.
The journal entries for the issue of shares are mainly in the form of inflow of cash. But the company records the cash price into two parts. The face value the share is recorded separately and the additional paid in capital is recorded separately.
The transactions are recorded in the image attached below.
To know more about journal entries and issue of shares, refer to the link:
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