McDougall Corporation is authorized to issue 500,000 shares of $ 40 par value, 10 percent cumulative preferred

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McDougall Corporation is authorized to issue 500,000 shares of $ 40 par value, 10 percent cumulative preferred stock and 2,000,000 shares of $ 0.01 par value common stock. The following transactions summarize the events affecting its capital stock accounts during its first year of operations:

1. The company issued 800,000 shares of common stock for cash of $ 20 per share.

2. 100,000 shares of preferred stock were sold for cash of $ 44 per share.

3. McDougall repurchased and held as treasury stock 10,000 shares of its own common stock at $ 19 per share.

4. 2,000 shares of the treasury stock were reissued at $ 23 per share.


Required:

A. Make the entries to record these events.

B. Prepare the shareholders’ equity section of McDougall’s balance sheet assuming Retained Earnings has a credit balance of $ 276,000.

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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,...
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