The Primo Corporation began operations two years ago and was authorized to issue 500,000 shares of 6%, $100 par value preferred stock and 2,000,000 shares of $5 par value common stock.The following transactions and events were completed during 2014. (Note: at the beginning of 2014 there are 1,000 shares of preferred stock and 500,000 shares of common stock)
Jan. 1 Issued an additional 40,000 shares of preferred stock for cash at $108 per share.
Feb. 2 Issued an additional 300,000 shares of common stock for cash at $10 per share.
Mar. 3 Declared a cash dividend on the preferred stock $123,000.
Apr. 4 Discovered a $60,000 understatement of 2012 depreciation.
May 5 Paid the cash dividend declared of March 3.
June 6 Issued 4,000 shares of common stock for land that was advertised for sale at $45,000. The stock market price of the stock is $10 per share.
Sept. 9 Primo purchased 4,500 shares of its own common stock at $13 per share.
Oct. 10 Sold 3,000 shares of treasury stock for $14 per share
Nov. 11 Declared a $1 cash dividend per share on common stock. (hint: compute the total number of shares of common stock outstanding.)
Dec. 31 Determined that net income for the year was $1,750,000.
(a) Journalize the transactions listed above.
(b) Post only the stockholder's equity accounts.
(c) Prepare a retained earnings statement for the year.
(d) Prepare a stockholders' equity section at December 31, 2014.
The solution provides journal entries to record issue of common stock, preferred stock above par value, record dividend payable along with their payment entries.