Vanowski, Inc., was organized and authorized to issue 10,000 shares of $100 par value, 9 percent preferred stock and 100,000 shares of no-par, $5 stated value common stock on July1, 20xx. Stock-related transactions for Vanowski are as follows:
July 1: Issued 20,000 shares of common stock at $11 per share.
July 1: Issued 1,000 shares of common stock at $11 per share for services rendered in connection with the organization of the company.
July 2: Issued 2,000 shares of preferred stock at par value for cash.
Jul 10: Issued 5,000 shares of common stock for land on which the asking price was $70,000. Market value of the stock was $12. Management wishes to record the land at full market value of the stock.
August 2: Purchased 3,000 shares of its common stock at $13 per share.
August 10: Declared a cash dividend for on month on the outstanding preferred stock and $.02 per share on common stock outstanding payable on August 22 to stockholders of record on August 12.
August 12: Date of record for cash dividends.
August 22: Paid cash dividends.
The solution explains the journal entries and the preparation of stockholders' equity section of Balance Sheet