As of January 1, 2021, the equity section of LD Food Co.'s balance sheet contained the following:
Question:
As of January 1, 2021, the equity section of LD Food Co.'s balance sheet contained the following:
Common stock, 10 million authorized, 2 million issued and$3,000,000
outstanding
Contributed surplus—from repurchase and cancellation of 275,000
common shares
Contributed surplus—from expired options on common shares250,000
Preferred stock, $4 cumulative dividend, 7 million authorized, 570,000
30,000 issued and outstanding
Retained earnings 2,500,000
Total shareholders' equity$6,595,000
On May 1, 2021, the company spent $802,500 to repurchase 300,000 common shares. These shares were canceled immediately.
On July 15, 2021, the company repurchased and canceled 4,000 preferred shares at $15/sh.
On November 1, 2021, the company declared and paid the annual cash dividends on the preferred shares. On the same day, the company issued a 5% stock dividend on common shares. LD Food's stock traded at $7/share after the dividend.
Required:
Record the journal entries for the above transactions occurring in 2021.
Expert Answer:
Stepbystep explanation Transaction 1 The shares are repurchased This means that they are supposed to be held at treasury However since they are cancelled already we dont need to setup treasury as the ... View the full answer
Accounting Principles Volume 2
ISBN: 978-1119502555
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
