Instructions

Prepare the journal entry for these transactions under the cost method of accounting for treasury stock.

The following information pertains to Bala Co.:

Preferred stock, cumulative:

Par value per share $100

Dividend rate 8%

Shares outstanding 10,000

Dividends in arrears none

Common stock:

Par value per share $10

Shares issued 120,000

Dividends paid per share $2.10

Market price per share $48.00

Additional paid-in capital $500,000

Unappropriated retained earnings (after closing) $270,000

Retained earnings appropriated for contingencies $300,000

Common treasury stock:

Number of shares 10,000

Total cost $250,000

Net income $630,000

Instructions

Compute (assume no changes in balances during the past year):

(a) Total amount of stockholders