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Andrew Company was incorporated on January 1, 2016, under a corporate charter that authorized the issuance of 50,000 shares of $5 par common stock and
Andrew Company was incorporated on January 1, 2016, under a corporate charter that authorized the issuance of 50,000 shares of $5 par common stock and 20,000 shares of $100 par, 8% preferred stock. The following events occurred during 2016. Andrew wants to record the events and develop financial statements on December 31, 2016.
a. | Issued for cash 10,000 shares of common stock at $15 per share and 1,000 shares of preferred stock at $110 per share on January 15, 2016. |
b. | Acquired a patent on April 1 in exchange for 2,000 shares of common stock. At the time of the exchange, the common stock was selling on the local stock exchange for $28 per share. |
c. | Repurchased 3,000 shares of common stock on May 1 at $20 per share. The corporation is holding the stock to be used for an employee bonus plan. |
d. | Declared a cash dividend of $2 per share to common stockholders and an 8% dividend to preferred stockholders on July 1. The preferred stock is noncumulative, nonparticipating. The dividend will be distributed on August 1. |
e. | Distributed the cash dividend on August 1. |
f. | Declared and distributed to preferred stockholders a 10% stock dividend on September 1. At the time of the dividend declaration, preferred stock was valued at $128 per share. |
g. | On December 31, calculated the annual net income for the year to be $312,000. |
Required:
1. | Record the accounting entries for items (a) through (f). |
2. | Develop the Stockholders Equity section of Andrew Companys balance sheet at December 31, 2016. You do not need to consider the notes that accompany the balance sheet. |
3. | Determine the book value per share of the common stock. Assume that the preferred stock can be redeemed at par. |
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