After purchasing the five venues in June 2020, Front Row needed additional cash to renovate and operate these venues. While the company had successfully borrowed money before (from bank loans as well as from the issuance of bonds), it could not find a lender willing to invest in the business due to the large amount of debt that the company currently has on its balance sheet.
With debt financing out of the question, Front Row considers its other options. The name of an old college friend, Steve Trotter, immediately comes to Cam and Anna's mind. Steve has previous work experience in the retail industry and expressed a desire to manage Front Row's current merchandising operations (the sale of DVDs). His vision was to expand the operations to include apparel (t-shirts, hats, etc.) and other items (such as bobble-head dolls of the artists). In addition, several other family members have expressed an interest in investing in the company.
Front Row was authorized to issue 25,000 shares of its $1 par common stock. On January 1, 2019, it issued Cam and Anna 8,000 shares each for $1 per share. Front Row was also authorized to issue 20,000 shares of 8%, $50 par preferred stock. The following transactions occurred during the remainder of 2020.
June 15 Issued 2,000 shares of $1 par common stock to Steve for $20 per share.
July 1 Issued 3,000 shares of $50 preferred stock to family members for $75 per share.
10 Repurchased 700 common shares at $16 per share.
Aug. 5 The board of directors declared a $25,000 dividend to all stockholders of record on
August 31, 2020. The dividend will be paid on September 15, 2020.
Sept. 15 The $25,000 dividend was paid.
Dec. 15 300 of the treasury shares were reissued at $22 per share.
Front Row had $53,250 of retained earnings to be included in the December 31, 2020 balance sheet.
Required:
1. Prepare the journal entries to record the above transactions.
2. Prepare the stockholders' equity section of the balance sheet at December 31, 2020?