Accounting Principles: A Business Perspective, 10th edition problem 13-6

Problem 13-6

Prepare journal entries for treasury stock transactions and for cash dividend; present stockholders equity section of balance sheet (L.O. 2, 3)

The stockholders equity of Briar Company on December 31, 2017, consisted of 1,000 authorized, issued, and outstanding shares of $72 cumulative preferred stock, stated value $240 per share, which were originally issued at $1,192 per share; 100,000 shares authorized, issued, and outstanding of no-par, $160 stated value common stock, which were originally issued at $160; and retained earnings of $1,120,000. Following are selected transactions and other data relating to 2018. No previous treasury stock transactions had occurred.

1. The company reacquired 2,000 shares of its common stock at $336.

2. One thousand of the treasury shares were reissued at $288.

3. Stockholders donated 1,000 shares of common stock to the company. These shares were immediately reissued at $256 to provide working capital.

The first quarters dividend of $18 per share was declared and paid on the preferred stock. No other dividends were declared or paid during 2018.

The company suffered a net loss of $224,000 for the year 2018.

Required

a. Prepare journal entries for the preceding numbered transactions.

b. Prepare the stockholders equity section of the December 31, 2018, balance sheet.