Reference no: EM132493892

In late 20X2, the Pickins Corporation was formed. The articles of incorporation authorize 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value preferred stock. On January 1, 20X3, 2,000,000 shares of common stock are issued for $15 per share. Also on January 1, 500,000 shares of preferred stock are issued at $30 per share.

Question a. Prepare journal entries to record these transactions on January 1. During March 20X3, the Pickins Corporation repurchased 100,000 common shares for the treasury at a price of $13 per share. During August 20X3, all 100,000 treasury shares are reissued at $16 per share.

Question b. Prepare journal entries to record these transactions. During November 20X3, Pickins issues a 25 percent stock dividend on all outstanding shares when its stock was selling for $50 per share. On December 1, 20X3, Pickens declares a $0.75 per share cash dividend on common stock and a $2.00 per share cash dividend on preferred stock. Payment is scheduled for December 20, 20X3, to shareholders of record on December 10, 20X3.

Question c. Prepare journal entries to record the declaration and payment of these stock and cash dividends