Peterson Company was granted a charter that authorized the following share capital Preferred shares 8 percent, par value $ 25, 20,000 shares Common shares No par value, 100,000 shares During the first year, 2014, the following selected transactions occurred in the order given a Sold 30,000 common s...

Req 1 a Cash A 1175000 Common shares 30000 shares x 35 SE 1050000 Preferred shares 5000 shares x 25 ...

Peterson Company was granted a charter that authorized the following share capital: Preferred shares: 8 percent, par

Question:

Peterson Company was granted a charter that authorized the following share capital:
Preferred shares: 8 percent, $ 25, 20,000 shares
Common shares: No 100,000 shares
During the first year, 2014, the following selected transactions occurred in the order given:
a. Sold 30,000 common shares at $ 35 cash per share and 5,000 preferred shares at $ 25 cash per share. Collected cash and issued the shares immediately.
b. Issued 2,000 preferred shares as full payment for a plot of land to be used as a future plant site. Assume that the share was selling at $ 25.
c. Declared and paid the quarterly cash on the preferred shares.
d. At December 31, 2014, the income summary account has a credit balance of $ 76,000.
Required:
1. Prepare the journal entries to record each of these transactions.
2. Explain the economic difference between acquiring an asset for cash and acquiring it by issuing shares. Is it “better” to acquire a new asset without having to give up another asset? 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,...