Major League Apparel has two classes of stock authorized: 5%, $10 par preferred, and $1 par value

Question:

Major League Apparel has two classes of stock authorized: 5%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2012, its first year of operations:

January 2 Issue 100,000 shares of common stock for $60 per share.

February 14 Issue 50,000 shares of preferred stock for $11 per share.

May 8 Repurchase 10,000 shares of its own common stock for $50 per share.

May 31 Reissue 5,000 shares of treasury stock for $55 per share.

December 1 Declare a cash dividend on its common stock of $0.50 per share and a $25,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30.

December 30 Pay the cash dividends declared on December 1.

Required:

1. Record each of these transactions.

2. Prepare the stockholders' equity section of the balance sheet as of December 31, 2012. Net income for the year was $480,000.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...