Question

On January 5, 2020, Shamrock Corporation received a charter granting the right to issue 5,500 shares of $100 par value, 7% cumulative and nonparticipating preferred stock, and 48,400 shares of $10 par value common stock. It then completed these transactions. Jan. 11 Feb. 1 July 29 Aug. 10 Dec. 31 Dec. 31 Issued 21,900 shares of common stock at $16 per share. Issued to Sanchez Corp. 3,900 shares of preferred stock for the following assets: equipment with a fair value of $50,800; a factory building with a fair value of $169,000; and land with an appraised value of $294,000. Purchased 1,800 shares of common stock at $18 per share. (Use cost method.) Sold the 1,800 treasury shares at $14 per share. Declared a $0.30 per share cash dividend on the common stock and declared the preferred dividend. Closed the Income Summary account. There was a $173,800 net income. Record the journal entries for the transactions listed above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record entries in the order displayed in the problem statement. Round answers to o decimal places, e.g. $5,275.) Date Account Titles and Explanation Debit Credit Feb. 1

Answer 1

Journal entries:

Date	Accounts Titles	Debit ($)	Credit($)
11-Jan	Cash (21900X $16)	350400
	Common Stock (21900 X $10)		219000
	Paid-in Capital in Excess of Par—Common		131400
1-Feb	Equipment	50800
	Factory Building	169000
	Land	294000
	Preferred Stock (3900 X $100)		390000
	Paid-in Capital in Excess of Par—Preferred		123800
29-Jul	Treasury Stock (1,800 X $18)	32400
	Cash		32400
10-Aug	Cash (1,800 X $14)	25200
	Retained Earnings (1,800 X $2)	7200
	Treasury Stock		32400
	Retained Earnings is debited as there is no presence of Paid-in Capital from Treasury Stock )
31-Dec	Retained Earnings	33870
	Cash Dividend Payable—Common		6570
	Cash Dividend Payable—Preferred		27300
	(Cash dividend=outstanding shares*cash dividend)
	$6570 = $21900 * 0.30
	$27300 = $3900 * 100 * 7%
31-Dec	Income Summary	173800
	Retained Earnings		173800

b)

Shamrock CORPORATION

Stockholders’ Equity

Dec 31 2020

Capital stock
Preferred stock—par value $100 per share,
7% cumulative and nonparticipating,
5,500 shares authorized,
3900 shares issued and outstanding		390000
Common stock—par value $10 per share,
48,400 shares authorized,
21,900 shares issued and outstanding		219000
Total capital stock (A)		609000
Additional paid-in capital
Paid-in capital in excess of par—preferred	123800
Paid-in capital in excess of par—common	131400
Total   (B)		255200
Total paid-in capital (C=A+B)		864200
Retained earnings
=173800-(7200+33870) (D)		132730
Total stockholders’ equity (C+D)		996930