In late 2019, the Pickins Corporation was formed. The articles of incorporation authorize 40,000 shares of common stock carrying a $1 par value, and 10,000 shares of $200 par value preferred stock.

On January 1, 2020, 25,000 shares of common stock are issued for $6 share. Also on this date, 1,000 shares of preferred stock are issued at $325 per shares.

a. Prepare journal entries to record the above issuance of common stock and preferred stock on January 1, 2020.

Debit Credit

During March 2020, the Pickins Corporation repurchased 10,000 common shares for the treasury at a price of $3.50 per share. During August 2020, all 10,000 treasury shares are reissued at $5 per share.

b. Prepare journal entries to record the purchase of the treasury shares in March 2020 and the reissuance of the shares in August 2020.

Debit Credit