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Recording Stockholders Equity Transactions Buzz Newsstand is authorized to issue 100,000
Chapter 21, Problem 21-9(choose chapter or problem)
Recording Stockholders’ Equity Transactions
Buzz Newsstand is authorized to issue 100,000 shares of $5 par common stock and 5,000 shares of $100 par, preferred 8% stock. On January 1, the beginning of the period, the stockholders’ equity accounts had the following balances:
| 301 Preferred Stock | $150,000 |
| 302 Paid-in Capital in Excess of Par—Preferred | 11,250 |
| 303 Common Stock | 225,000 |
| 304 Paid-in Capital in Excess of Par—Common | 112,500 |
| 305 Retained Earnings | 366,800 |
| 307 Dividends—Preferred | 0 |
| 308 Dividends—Common | 0 |
Instructions In your working papers:
1. Record the following transactions on general journal page 42. Close the Dividends and Retained Earnings accounts.
2. Prepare the stockholders’ equity section of the balance sheet.
| Date | Transactions |
| Mar. 15 | The board of directors approved a semiannual cash dividend of $62,250 for both preferred and common stockholders. The dividend is payable to stockholders of record as of April 15 with payment on May 1, Memorandum 635. |
| Apr. 19 | Issued 500 shares of preferred stock at $108, Memorandum 651. |
| May 1 | Paid the dividends declared on March 15, Check 1256. |
| Sept. 1 | The board of directors approved a semiannual cash dividend of $79,250 for both preferred and common stockholders. The dividend is payable to stockholders of record as of October 1 with payment on November 1, Memorandum 828. |
| Nov. 1 | Paid the dividend declared on September 1, Check 2451. |
Questions & Answers
QUESTION:
Recording Stockholders’ Equity Transactions
Buzz Newsstand is authorized to issue 100,000 shares of $5 par common stock and 5,000 shares of $100 par, preferred 8% stock. On January 1, the beginning of the period, the stockholders’ equity accounts had the following balances:
| 301 Preferred Stock | $150,000 |
| 302 Paid-in Capital in Excess of Par—Preferred | 11,250 |
| 303 Common Stock | 225,000 |
| 304 Paid-in Capital in Excess of Par—Common | 112,500 |
| 305 Retained Earnings | 366,800 |
| 307 Dividends—Preferred | 0 |
| 308 Dividends—Common | 0 |
Instructions In your working papers:
1. Record the following transactions on general journal page 42. Close the Dividends and Retained Earnings accounts.
2. Prepare the stockholders’ equity section of the balance sheet.
| Date | Transactions |
| Mar. 15 | The board of directors approved a semiannual cash dividend of $62,250 for both preferred and common stockholders. The dividend is payable to stockholders of record as of April 15 with payment on May 1, Memorandum 635. |
| Apr. 19 | Issued 500 shares of preferred stock at $108, Memorandum 651. |
| May 1 | Paid the dividends declared on March 15, Check 1256. |
| Sept. 1 | The board of directors approved a semiannual cash dividend of $79,250 for both preferred and common stockholders. The dividend is payable to stockholders of record as of October 1 with payment on November 1, Memorandum 828. |
| Nov. 1 | Paid the dividend declared on September 1, Check 2451. |
Step 1 of 3
The stockholders’ equity is defined as a section prevailing in the balance sheet that represents the amount obtained by a corporation by issuing its common and preferred stock and its operations (retained earnings). It is also known as the book value of a firm.