Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

Kinkaid Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders’ equity during its first year of operations.

      

	General Journal	Debit	Credit
a.	Cash	300,000
	Common Stock, $25 Par Value		250,000
	Paid-In Capital in Excess of Par Value, Common Stock		50,000
b.	Organization Expenses	150,000
	Common Stock, $25 Par Value		125,000
	Paid-In Capital in Excess of Par Value, Common Stock		25,000
c.	Cash	43,000
	Accounts Receivable	15,000
	Building	81,500
	Notes Payable		59,500
	Common Stock, $25 Par Value		50,000
	Paid-In Capital in Excess of Par Value, Common Stock		30,000
d.	Cash	120,000
	Common Stock, $25 Par Value		75,000
	Paid-In Capital in Excess of Par Value, Common Stock		45,000

 

Required:

2.

How many shares of common stock are outstanding at year-end? Explanation: 2. Number of outstanding shares        Issued in (a) 10,000     Issued in (b) 5,000     Issued in (c) 2,000     Issued in (d) 3,000         Total 20,000          3. Minimum legal capital =  Outstanding shares × Par value per share   = 20,000 × $25 = $500,000    4. Total paid-in capital from common stockholders          From transaction (a) $ 300,000     From transaction (b)   150,000     From transaction (c)   80,000     From transaction (d)   120,000        Total paid-in capital $ 650,000          5. Book value per common share             Total stockholders' equity (given) $ 695,000       Outstanding shares (from Part 2)   20,000              Book value per common share $ 34.75     ($695,000 / 20,000 shares)

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2013:

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2013:

 

Common stock—$25 par value, 50,000 shares authorized,     30,000 shares issued and outstanding		$	750,000
Paid-in capital in excess of par value, common stock			50,000
Retained earnings			340,000
Total stockholders’ equity		$	1,140,000

In year 2014, the following transactions affected its stockholders’ equity accounts.

Jan.	2	Purchased 3,000 shares of its own stock at $25 cash per share.
Jan.	7	Directors declared a $1.50 per share cash dividend payable on Feb. 28 to the Feb. 9 stockholders of record.
Feb.	28	Paid the dividend declared on January 7.
July	9	Sold 1,200 of its treasury shares at $30 cash per share.
Aug.	27	Sold 1,500 of its treasury shares at $20 cash per share.
Sept.	9	Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record.
Oct.	22	Paid the dividend declared on September 9.
Dec.	31	Closed the $52,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required:
1.	Prepare journal entries to record each of these transactions for 2014. Explanation: 1.   Jan. 2   Purchased treasury stock (3,000 × $25) = $75,000         Jan. 7   Declared $1.50 dividend per share on 27,000 outstanding shares = $40,500         July 9   Cash (1,200 × $30) = $36,000     Treasury Stock, Common (1,200 × $25) = $30,000     Paid-In Capital, Treasury Stock (1,200 × $5) = $6,000         Aug. 27   Cash (1,500 × $20) = $30,000     Treasury Stock, Common (1,500 × $25) = $37,500         Sept. 9   Declared $2 dividend on 29,700 outstanding shares = $59,400

York’s outstanding stock consists of 80,000 shares of cumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

York’s outstanding stock consists of 80,000 shares of cumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of operation, the corporation declared and paid the following total cash dividends:

    

2013	$	20,000
2014		28,000
2015		200,000
2016		350,000

Determine the amount of dividends paid each year to each of the two classes of stockholders assuming that the preferred stock is cumulative. Also determine the total dividends paid to each class for the four years combined.  Explanation:     Cumulative Preferred Common   2013 ($20,000 paid)           Preferred* $ 20,000           Common—remainder     $ 0         Total for the year $ 20,000     $ 0          (Note: $10,000 in preferred stock dividends in arrears.)                       2014 ($28,000 paid)           Preferred—arrears from 2013 $ 10,000           Preferred* $ 18,000           Common—remainder     $ 0          Total for the year $ 28,000     $ 0          (Note: $12,000 in preferred stock dividends in arrears.)                        2015 ($200,000 paid)           Preferred—arrears from 2014 $ 12,000           Preferred* $ 30,000           Common—remainder     $ 158,000         Total for the year $ 42,000     $ 158,000          (Note: $0 in preferred stock dividends in arrears.)                        2016 ($350,000 paid)           Preferred* $ 30,000           Common—remainder     $ 320,000         Total for the year $ 30,000     $ 320,000         (Note: $0 in preferred stock dividends in arrears.)                       2013-2016 ($598,000 paid)                Total for four years $ 120,000     $ 478,000           * The holders of the cumulative preferred stock are entitled to no more than $30,000 of dividends declared in any year (7.5% × $5 × 80,000 shares) plus any dividends skipped in prior years.