Answer:
a.
Dr Cash 2,025,000
Cr Common stock 180,000
Cr Preferred stock 270,000
Cr Additional paid-in capital - common stock 1,080,000
Cr Additional paid-in capital - preferred stock 495,000
( to record the issuance of common stock and preferred stock)
Dr Treasury stock 46,000
Cr Cash 46,000
(to record repurchased of 2,000 common shares at $23 per share)
b.
Dr Cash 42,000
Cr Treasury stock 34,500
Cr Additional paid-in capital ( Treasury stock) 7,500
( to record 1,500 common stock sold at $28 per share)
c.
Dr Cash 10,000
Dr Additional paid-in capital ( Treasury stock) 1,500
Cr Treasury stock 11,500
( to record 500 common stock sold at $20 per share)
Explanation:
a.
<u>*Issuance:</u>
Cash receipt = Common stock unit price x number of common stock issued + Preferred stock unit price x number of preferred stock issued = 2,025,000
Common stock account and preferred stock account will be recorded as par value x number of stock issued. Thus: Common stock account = 60,000 x 3 = 180,000; Preferred sock account = 9,000 x 30 = $270,000
Additional paid-in capital common stock account balance and Additional paid-in capital preferred stock account balance each is equal to the difference between unit sell price and par value times number of stock issued. Thus: Common stock account = 60,000 x 18 = 1,080,000; Preferred sock account = 9,000 x 55 = $495,000.
<u>* Repurchased:</u>
Cash spent on repurchased = no of repurchased x repurchased unit price = 2,000 x 23 = $46,000
b.
Cash receipt ( Debit) = no of common stock sold x unit selling price = 1,500 x 28 = $42,000
Treasury stock will be credited at the amount equal : repurchased price x no of common stock sold = 23 x 1,500 = $34,500
The difference will be credited into Additional paid-in capital ( Treasury stock) $7,500
c.
Cash receipt ( Debit) = no of common stock sold x unit selling price = 500 x 20 = $10,000
Treasury stock will be credited at the amount equal : repurchased price x no of common stock sold = 23 x 500 = $11,500
The difference will be debited into Additional paid-in capital ( Treasury stock) $1,500.
