Andrew Company was incorporated on January 1 2016 under a co

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 and2 shares of S 100 par, 8% preferred stock The following events occurred during 2016 Andrew wants to record the events and develop financal 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 $110 per share on January 15, 2016 b. Acquired a patent on Apnil 1 in exchange for 2,000 shares of common stock. At the time of the exchange, the common stock was selling on the local stock exchange for $30 per share c. Repurchased 500 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 Declared a cash dividend of S 1 per share to common stockholders and an 8% dividend to preferred stockholders on July 1 . The preferred stock is noncumulative, nonparticipating. The dividend will be distributed on August 1 d e. Distributed the cash dividend on August 1

Solution

Date Accounts Title Dr Cr a Cash $250,000 Common Stock (10000*5) $50,000 Paid in capital in excess of par-Common Stock $200,000 Cash $110,000 Preferred Stock (1000*100) $100,000 Paid in capital in excess of par-Preferred Stock $10,000 b Patent $30,000 Common Stock (2000*5) $10,000 Paid in capital in excess of par-Common Stock $25,000 c Treasury stock $10,000 Cash (500*20) $10,000 d Cash Dividend-Common 11500 Cash Dividend-Preferred 8000 Cash Dividend Payable-Common (11500*1)) 11500 Cash Dividend Payable-Preferred (1000*100*8%) 8000 e Cash Dividend Payable-Common (11500*1)) 11500 Cash Dividend Payable-Preferred (1000*100*8%) 8000 Cash 19500 f Retained Earnings 30000 Preferred Stock (1000*100*10%) 10000 Paid in capital in excess of par-Preferred Stock 20000 (100*20) g Retained Earnings 200000 Income Summary $200,000 Ans 2 Shareholder Equity Section Preferred stock $110,000 Paid in capital in excess of par-Preferred Stock $30,000 Common stock $60,000 Paid in capital in excess of par-Common Stock $225,000 Retained Earnings (200000-19500-30000) $150,500 Treasury stock (at cost) ($60,000) Ending Stockholder Equity $375,500 ans 3 Book value per sahre 32.65 (60000+225000+150500-60000)/(12000-500)