Cullumber Company reported the following amounts in the stoc

Cullumber Company reported the following amounts in the stockholders\' equity section of its December 31, 2016, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 1,900 shares issued) $190,000 Common stock, $5 par (101,000 shares authorized, 20,200 shares issued) Additional paid-in capital Retained earnings 101,000 125,000 31,000 $847,000 Total During 2017, Cullumber took part in the following transactions concerning stockholders\' equity. 1. Paid the annual 2016 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2016. 2. Purchased 1,800 shares of its own outstanding common stock for $43 per share. Cullumber uses the cost method. 3. Reissued 700 treasury shares for land valued at $31,600 4. Issued 530 shares of preferred stock at $104 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $47 per share. 6. Issued the stock dividend 7. Declared the annual 2017 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2018. Question 1 Prepare journal entries to record the transactions described above. (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 o for the amounts.) No. Account Titles and Explanation 1. Debit Credit 2. 3.

Solution

Answer

S. No.

Particulars

Dr. $

Cr. $

1

Dividend Payable – Preferred Stock (1900 Shares * $10)

19,000

Dividend Payable – Common Stock(20,200 Shares * $2)

40,400

Bank

59,400

(Being Dividend Declared paid)

2

Treasury Stock(1800 Shares * $43)

77,400

Bank

77,400

(Being 1800 own Shares purchased @$43 per share)

3

Land

31,600

Treasury Stock (700 Shares * $43)

30,100

Additional Paid-in-capital – Treasury Stock

1,500

4

Bank (530 shares @ $104)

55,120

Preference Capital (530 shares @ $100)

53,000

Additional Paid-in-capital – Preference Stock

(530 shares @ $4)

2,120

(Being preference shares issued at premium)

5

Retained Earnings (1910 shares @47)

94,940

Common Stock Dividend distributable (2020 shares @5)

10,100

Additional Paid in capital

84,840

(Being 10% stock dividend declared)

6

Common Stock Dividend distributable

10,100

Common Stock

10,100

(Being Stock dividend paid)

7

Dividend on Common Stock (21,010 Shares @ $2)

42,020

Dividend payable

42,020

(Being dividend on Common shares declared)

Dividend on Preference Stock (2430 Shares @ $10)

24,300

Dividend payable

24,300

(Being dividend on preference shares declared)

Preference Stock at the end = Opening + Issued

= 1900 + 530 shares

= 2,430 Shares

Common stock at the time of Stock Dividend = Opening - purchased + Reissued

= 20,200 – 1,800 + 700

= 19,100 Shares

Stock Dividend = 10% * 19,100 Shares = 1,910 Shares

Common Stock at the time of end Dividend = 19,100 shares + 1,910 Shares

= 21,010 Shares.

S. No.	Particulars	Dr. $	Cr. $
1	Dividend Payable – Preferred Stock (1900 Shares * $10)	19,000
	Dividend Payable – Common Stock(20,200 Shares * $2)	40,400
	Bank		59,400
	(Being Dividend Declared paid)
2	Treasury Stock(1800 Shares * $43)	77,400
	Bank		77,400
	(Being 1800 own Shares purchased @$43 per share)
3	Land	31,600
	Treasury Stock (700 Shares * $43)		30,100
	Additional Paid-in-capital – Treasury Stock		1,500
4	Bank (530 shares @ $104)	55,120
	Preference Capital (530 shares @ $100)		53,000
	Additional Paid-in-capital – Preference Stock (530 shares @ $4)		2,120
	(Being preference shares issued at premium)
5	Retained Earnings (1910 shares @47)	94,940
	Common Stock Dividend distributable (2020 shares @5)		10,100
	Additional Paid in capital		84,840
	(Being 10% stock dividend declared)
6	Common Stock Dividend distributable	10,100
	Common Stock		10,100
	(Being Stock dividend paid)
7	Dividend on Common Stock (21,010 Shares @ $2)	42,020
	Dividend payable		42,020
	(Being dividend on Common shares declared)
	Dividend on Preference Stock (2430 Shares @ $10)	24,300
	Dividend payable		24,300
	(Being dividend on preference shares declared)