This is the problem:
P11-5A
Milner Corporation has been authorized to issue 20,000 shares of $100 par value, 10%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2007, the ledger contained the following balances pertaining to stockholders' equity.
Preferred Stock $130,000
Paid-in Capital in Excess of Par Value-Preferred Stock 20,000
Common Stock 2,000,000
Paid-in Capital in Excess of Stated Value-Common Stock 1,850,000
Treasury Stock-Common (5,000 shares) 55,000
Retained Earnings 82,000
The preferred stock was issued for $150,000 cash. All common stock issued was for cash. In November 5,000 shares of common stock were purchased for the treasury at a per share cost of $11. No dividends were declared in 2007.
Prepare the journal entries for the following. (For multiple debit/credit entries, list accounts in order of magnitude.)
(1) Issuance of preferred stock for cash.
Date Account / Description Debit Credit
(1) Common stockPaid-in capital in excess of par value-preferredPreferred stockPaid-in capital in excess of stated value-commonRetained earningsTreasury stockCash $
Paid-in capital in excess of par value-preferredCashTreasury stockPreferred stockRetained earningsCommon stockPaid-in capital in excess of stated value-common $
Paid-in capital in excess of stated value-commonTreasury stockPreferred stockCashCommon stockRetained earningsPaid-in capital in excess of par value-preferred $
(2) Issuance of common stock for cash.
Date Account / Description Debit Credit
(2) Common stockRetained earningsPaid-in capital in excess of par value-preferredkPaid-in capital in excess of stated value-commonPreferred stockTreasury stockCash $
Paid-in capital in excess of par value-preferredkCashPreferred stockPaid-in capital in excess of stated value-commonRetained earningsTreasury stockCommon stock $
Retained earningsTreasury stockPreferred stockPaid-in capital in excess of stated value-commonCommon stockPaid-in capital in excess of par value-preferredCash $
(3) Purchase of common treasury stock for cash.
Date Account / Description Debit Credit
(3) Treasury stockRetained earningsCashPaid-in capital in excess of stated value-commonPreferred stockCommon stockPaid-in capital in excess of par value-preferred $
Paid-in capital in excess of par value-preferredPaid-in capital in excess of stated value-commonRetained earningsTreasury stockCashPreferred stockCommon stock $
Complete the stockholders’ equity section of the balance sheet at December 31, 2007 below.
MILNER CORPORATION
Partial Balance Sheet
December 31, 2007
Stockholders’ equity
Paid-in capital
Capital stock
Treasury stockCommon stockRetained earningsIn excess of stated value-common stock10% Preferred stockIn excess of par value-preferred stock,
$100 par value, noncumulative,
shares authorized,
shares issued and outstanding $
In excess of stated value-common stockRetained earningsCommon stockTreasury stock10% Preferred stockIn excess of par value-preferred stock,
no par, $5 stated value
shares authorized,
shares issued,
and shares outstanding
Total capital stock $
Additional paid-in capital
10% Preferred stockTreasury stockIn excess of stated value-common stockRetained earningsIn excess of par value-preferred stockCommon stock
Common stockTreasury stock10% Preferred stockIn excess of stated value-common stockIn excess of par value-preferred stockRetained earnings
Total additional paid-in capital
Total paid-in capital
In excess of par value-preferred stockIn excess of stated value-common stockTreasury stockCommon stockRetained earnings10% Preferred stock
Total paid-in capital and retained earnings
Less: Treasury stockRetained earningsIn excess of par value-preferred stockIn excess of stated value-common stock10% Preferred stockCommon stock
( common shares) ()
Total Stockholders’ Equity $
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