6% Preferred stock, $100 par value, cumulative,
50,000 shares authorized, 30,000 shares issued
and outstanding $ 3,000,000
Common stock, no par, $10 stated value, 1,000,000
shares authorized, 400,000 shares issued and
Total capital stock 13,000,000
Additional paid-in capital
In excess of par value-preferred $300,000
In excess of stated value-common 600,000 900,000
Total paid-in capital 13,900,000
Retained earnings (Note A) 4,100,000
Total stockholders' equity $18,000,000
Note A: Preferred dividends are in arrears for 2005.
Prepare the appropriate journal entries, if any, for the following transactions in 2006. You may omit journal entry explanations but you should show computations.
1/25/06 Issued 60,000 shares of common stock for $40 per share.
2/18/06 The Board of Directors declared a cash dividend on preferred and common stock totaling $600,000, payable on March 15, to stockholders of record on February 28. (Record dividends payable on preferred and common stock in separate accounts.)
2/28/06 Date of record for cash dividends on preferred and common stock.
3/15/06 Paid the cash dividend to preferred and common stockholders.
5/20/06 Declared a 10% stock dividend on the common stock, payable on June 15, to stockholders of record on May 31. The market value of Sunset Corporation's common stock was $40 per share.
6/15/06 Distributed stock dividend to common stockholders.
7/10/06 Purchased 50,000 shares of common stock for the treasury at $38 per share.