Chart of Accounts Labels and Amount Descriptions General Jou

Chart of Accounts Labels and Amount Descriptions General Journal Instructions Andrew Company was incorporated on January 1, 2016, under a corporate charter that authorized the issuance of 50,000 shares of $5 par common stock and 20,000 shares of $100 par 8% preferred stock The following events occurred during 2016. Andrew wants to record the events and develop financial statements on December 31, 2016. a Issued for cash 10,000 shares of common stock at $25 per share and 1,000 shares of preferred stock at $105 per share on January 15, 2016 b. Acquired a patent on Apri 1 in exchange for 2,000 shares of common stock. At the time of the exchange, the common stock was selling on the ocal stock exchange for $32 per share c Repurchased 3,000 shares of common stock on May 1 at $20 per share. The corporation is holding the stock to be used for an employee bonus plan. d Declared a cash dividend of S2 per share to common stockholders and an 8% diidend to preferred stockholders on July 1 The preferred stock s noncumulative, nonparticipating The dividend will be distributed on August 1 e Distributed the cash dividend on August 1

Solution

date

explanation

debit

credit

1-

cash

355000

common stock

50000

preferred stock

100000

additional paid in capital-common stock

200000

additional paid in capital-preferred stock

5000

2-

patent

64000

common stock

10000

additional paid in capital

54000

3-

cash

60000

treasury stock

60000

4-

retained dividend

26000

dividend payable

18000

preferred dividend payable

8000

5-

dividend payable

26000

preferred dividend payable

8000

cash

18000

6-

retained earning

12800

preferred stock

10000

additional paid in capital-preferred stock

2800

2-

Equity section of balance sheet

Common stock

60000

preferred stock

110000

additional paid in capital-common stock

200000

additional paid in capital-preferred stock

7800

treasury stock

-60000

retained earnings

227000-26000-12800

188200

total of share holders equity

506000

3-

Book value per share of equity

total of shareholders equity

506000

less preferred stock at par

110000

book value of common stock

396000

no of common stock outstanding

10000+2000-3000

9000

book value per common share

396000/9000

44

date	explanation	debit	credit
1-	cash	355000
	common stock		50000
	preferred stock		100000
	additional paid in capital-common stock		200000
	additional paid in capital-preferred stock		5000
2-	patent	64000
	common stock		10000
	additional paid in capital		54000
3-	cash	60000
	treasury stock		60000
4-	retained dividend	26000
	dividend payable		18000
	preferred dividend payable		8000
5-	dividend payable	26000
	preferred dividend payable		8000
	cash		18000
6-	retained earning	12800
	preferred stock		10000
	additional paid in capital-preferred stock		2800
2-	Equity section of balance sheet
	Common stock		60000
	preferred stock		110000
	additional paid in capital-common stock		200000
	additional paid in capital-preferred stock		7800
	treasury stock		-60000
	retained earnings	227000-26000-12800	188200
	total of share holders equity		506000
3-	Book value per share of equity
	total of shareholders equity		506000
	less preferred stock at par		110000
	book value of common stock		396000
	no of common stock outstanding	10000+2000-3000	9000
	book value per common share	396000/9000	44