Question

On December 31, 2021, Sandhill Co. had 1,255,000 shares of $7 par common stock issued and outstanding. At December 31, 2021, stockholders’ equity had the amounts listed here.
Common Stock $8,785,000
Additional Paid-in Capital 1,810,000
Retained Earnings 1,180,000

Transactions during 2022 and other information related to stockholders’ equity accounts were as follows.

1. On January 10, issued at $112 per share 130,000 shares of $100 par value, 7% cumulative preferred stock.
2. On February 8, reacquired 18,600 shares of its common stock for $12 per share.
3. On May 9, declared the yearly cash dividend on preferred stock, payable June 10, to stockholders of record on May 31.
4. On June 8, declared a cash dividend of $1.70 per share on the common stock outstanding, payable on July 10, to stockholders of record on July 1.
5. Net income for 2022 was $3,546,000.

Record the journal entries that are required for items 1–5 above. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

The journal entries for the given transactions are recorded as follows:

1) The issue of preferred stock is recorded by debiting the cash account by $14,560,000 and crediting the preferred stock and additional capital by $13,000,000 and 156,000.

2) The repurchase of common stock is recorded by debiting the treasury stock and crediting the cash with the same amount of $223,200.

3) The dividend declared on preferred stock is recorded by debiting the retained earnings and crediting the dividend payable with equal amounts of $910,000 and at the time of making payment of dividends to preferred investors, the dividend payable should be debited and cash should be credited with same amounts of $910,000.

4) The dividend declared on common stock is recorded by debiting the retained earnings and crediting the dividend payable with equal amounts of $2,101,880. The dividends to common investors are recorded by debiting the dividend payable and crediting the cash with equal amounts of 2,101,880.

5) The transfer of net income at year-end is recorded by debiting the net income and crediting the Retained earnings with equal amounts of $3,546,000.

What are the journal entries?

Journal entries are used to recognize the transactions of financial nature as and when entered by an entity. It is the primary step in the accounting process.

The journal entries for the provided transactions are as follows:

Date          Particulars                                              Debit ($)      Credit ($)

Jan 10   Cash Account (130,000 shares X $112 )   14,560,000

                  Preferred Stock (130,000 shares X $100)               13,000,000

                  Additional capital (130,000 shares X $12)                 156,000  

               (To record the issue of preferred stock )

Feb 8    Treasury stock (18,600 shares X $12)        223,200

                  Cash                                                                            223,200

             (To record the repurchase of common stock )

May 9   Retained earnings (130,000 X $100 X 7%) 910,000

                 Dividend payable                                                      910,000

               (To record the dividend declared on preferred stock )

Jun 8     Retained earnings(1,255,000-18,600 X $1.70) 2,101,880

                  Dividend payable                                                       2,101,880

               (To record the dividend declared on common stock )

Jun 10    Dividend payable                                               910,000

                    Cash                                                                            910,000

                (To record the payment of preferred dividends)

July 1      Dividend payable                                            2,101,880

                    Cash                                                                           2,101,880

                (To record the payment of common dividends)

Dec 31    Net income                                                      3,546,000

                   Retained earnings                                                     3,546,000

                (To record the transfer of net income at year-end)

Therefore, the journal entries for the provided transactions are recognized as above.

Learn more about the journal entries in the related link:

brainly.com/question/16171837

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