Question

. Colden Company was formed on July 1, 2014. It was authorized to issue 500,000 shares of $10 par common stock and 100,000 shares of 4%, $25 par, cumulative and non-participating preferred stock. Colden has a July 1–June 30 fiscal year. The following information relates to the stockholders’ equity accounts of Colden.

Common Stock: Prior to the 2016-2017 fiscal year, Colden had 110,000 shares of common stock as follows.

1. 95,000 shares were issued for cash on July 1, 2014, at $31 per share.
2. On July 24, 2014, 5,000 shares were exchanged for a plot of land which costed the seller $70,000 in 2008 and had an estimated fair value of $220,000 on July 24, 2014.
3. 10,000 shares were issued on March 1, 2016 for $42 per share.

During the 2016-2017 fiscal year, the following transactions regarding common stock took place.

11/30/16          Colden purchased 2,000 shares of its own stock on the open market at $39 per share (Cost method is used).

12/15/16          Colden declared a 5% stock dividend for stockholders of record on January 15, 2017, to be distributed on January 31, 2017. The market price was $52 per share on December 15, 2016.

6/20/17            Colden sold 500 shares of its own common stock that it had purchased on November 30, 2016, for $21,000.

Retained Earnings: As of June 30, 2016, Colden retained earnings account had a balance of $550,000. For the fiscal year ending June 30, 2017, Colden reported net income of $120,000.

Prepare journal entries on 7/1/14, 7/24/14, 3/1/16, 11/30/16, 12/15/16 and 6/20/17.

Answer 1