Reference no: EM131736069
Prepare entries to record the issuance of common, preferred, and Treasury stocks
Question 1:
The following items were shown on the balance sheet of Herman Corporation on December 31, 2008:
Stockholders' Equity
Paid-In Capital
Capital Stock
Common stock, $5 par value, 360,000 shares
authorized; ______ shares issued and ______ outstanding...................... $1,650,000
Additional paid-in capital
In excess of par value................................................................................ 165,000
Total paid-in capital............................................................................. 1,815,000
Retained Earnings................................................................................................. 750,000
Total paid-in capital and retained earnings............................................... 2,565,000
Less: Treasury stock (15,000 shares).................................................................... (180,000)
Total stockholders' equity......................................................................... $2,385,000
Instructions
Complete the following statements and show your computations.
(a) The number of shares of common stock issued was _______________.
(b) The number of shares of common stock outstanding was ____________.
(c) The sales price of the common stock when issued was $____________.
(d) The cost per share of the treasury stock was $_______________.
(e) The average issue price of the common stock was $______________.
Question 2:
Werner Corporation has the following stockholders' equity accounts on January 1, 2008:
Common Stock, $10 par value .............................................. $1,500,000
Paid-in Capital in Excess of Par............................................ 200,000
Retained Earnings.................................................................. 500,000
Total Stockholders' Equity.............................................. $2,200,000
The company uses the cost method to account for treasury stock transactions. During 2008, the following treasury stock transactions occurred:
April 1 Purchased 9,000 shares at $16 per share.
August 1 Sold 3,000 shares at $18 per share.
October 1 Sold 3,000 shares at $15 per share.
Instructions
(a) Journalize the treasury stock transactions for 2008.
(b) Prepare the Stockholders' Equity section of the balance sheet for Werner Corporation at December 31, 2008. Assume net income was $110,000 for 2008.