Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of
Question:
Nautical has two classes of stock authorized: $10 par preferred, and $1 par value common. As of the beginning of 2021, 125 shares of preferred stock and 3,000 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:
March 1 Issue 3,000 additional shares of common stock for $10 per share.
April 1 Issue 175 additional shares of preferred stock for $40 per share.
June 1 Declare a cash dividend on both common and preferred stock of $0.25 per share to all stockholders of record on June 15.
June 30 Pay the cash dividends declared on June 1.
August 1 Purchase 175 shares of common treasury stock for $7 per share.
October 1 Resell 125 shares of treasury stock purchased on August 1 for $9 per share.
Nautical has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Preferred Stock, $1,250; Common Stock, $3,000; Additional Paid-in Capital, $19,500; and Retained Earnings, $11,500. Net income for the year ended December 31, 2021, is $7,650.
Required:
1. Record each of these transactions.
2. Indicate whether each of these transactions would increase (+), decrease (−), or have no effect (NE) on total assets, total liabilities, and total stockholders’ equity by completing the following chart.
DividendA 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,...
Step by Step Answer:
Financial Accounting
ISBN: 978-1259914898
5th edition
Authors: David Spiceland, Wayne M. Thomas, Don Herrmann