After five years of owning a lawn equipment sales and repair shop, Adam Freeman's business, Cut-Rite...
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After five years of owning a lawn equipment sales and repair shop, Adam Freeman's business, Cut-Rite Lawn Equipment, has expanded and he now has three locations. Based on the advice of both his accountant and attorney, Al decided to change his business from a sole proprietorship to a corporation. One of the benefits is that he discovered he can issue shares of stock to investors to raise additional capital to expand to even more locations faster. The following transactions happened during the current year that need to be journalized: 1/05 The board of directors authorized 100,000 common stock, $25 par of which 55,000 shares were issued at market price of $32 for each share. The board of directors authorized 25,000 shares of cumulative preferred 2% stock, $75 par and 15,000 shares were issued at $81 each. 7/01 The CFO initiated a share buyback of 8,000 shares of which the company paid $37 per share. The board of directors declared a $52,500 cash dividend. The dates associated with this cash dividend are 11/15, 11/29 & 12/15. 2/01 The board of directors declared a 2% stock dividend for common shareholders. The dates associated with this dividend are 11/22, 12/06 & 12/22. The market value of a single share of stock was $35 on the date of declaration. 12/31 Half of the treasury stock shares were sold at $39 per share. Close the Dividend accounts. After five years of owning a lawn equipment sales and repair shop, Adam Freeman's business, Cut-Rite Lawn Equipment, has expanded and he now has three locations. Based on the advice of both his accountant and attorney, Al decided to change his business from a sole proprietorship to a corporation. One of the benefits is that he discovered he can issue shares of stock to investors to raise additional capital to expand to even more locations faster. The following transactions happened during the current year that need to be journalized: 1/05 The board of directors authorized 100,000 common stock, $25 par of which 55,000 shares were issued at market price of $32 for each share. The board of directors authorized 25,000 shares of cumulative preferred 2% stock, $75 par and 15,000 shares were issued at $81 each. 7/01 The CFO initiated a share buyback of 8,000 shares of which the company paid $37 per share. The board of directors declared a $52,500 cash dividend. The dates associated with this cash dividend are 11/15, 11/29 & 12/15. 2/01 The board of directors declared a 2% stock dividend for common shareholders. The dates associated with this dividend are 11/22, 12/06 & 12/22. The market value of a single share of stock was $35 on the date of declaration. 12/31 Half of the treasury stock shares were sold at $39 per share. Close the Dividend accounts.
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Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
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