Prepare journal entries to record these transactions

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Question - On December 31, 2014, the stockholders' equity section of balance sheet appeared as follows.

Contributed capital:

Common stock, $8 par value, 800,000 shares authorized, 240,000 shares issued and outstanding $ 1,920,000

Additional paid-in capital 5,120,000

Total contributed capital $ 7,040,000

Retained earnings 3,296,000

Total stockholders' equity $10,336,000

The following are selected transactions involving stockholders' equity in 2015. On January 4, the board of directors obtained authorization for 80,000 shares of $40 par value noncumulative preferred stock that carried an indicated dividend rate of $4 per share and was callable at $42 per share. On January 14, the company sold 48,000 shares of the preferred stock at $40 per share and issued another 8,000 in exchange for a building valued at $320,000. On March 8, the board of directors declared a 2-for-1 stock split on the common stock. On April 20, after the stock split, the company purchased 12,000 shares of common stock for the treasury at a price of $12 per share; 4,000 of these shares subsequently were sold on May 4 at an average price of $16 per share. On July 15, the board of directors declared a cash dividend of $4 per share on the preferred stock and $0.40 per share on the common stock. The date of record was July 25. The dividends were paid on August 15. The board of directors declared a 15 percent stock dividend on November 28, when the common stock was selling for $20. The date of record for the stock dividend was December 15, and the dividend was to be distributed on January 5.

Required -

1. Prepare journal entries to record these transactions.

2. Prepare the stockholders' equity section of Torez's balance sheet as of December 31, 2015. Net loss for 2015 was $872,000. (Hint: Use T accounts to keep track of transactions.)

Reference no: EM133108751

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