The following selected items and amounts were taken from the balance sheet of Quale Company as of

Question:

The following selected items and amounts were taken from the balance sheet of Quale Company as of December 31, 2012:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 93,000

Property, plant, and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850,000

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000

Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000

Preferred stock (7%, $100 par, noncumulative, 10,000 shares

authorized, 5,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000

Common stock ($10 par, 100,000 shares authorized,

80,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000

Paid-in capital in excess of par, preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000

Paid-in capital in excess of par, common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Paid-in capital, treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000

Required:

For each of parts (1) to (5), (a) prepare the necessary journal entry (or entries) to record each transaction, and (b) calculate the amount that would appear on the December 31, 2012, balance sheet as a consequence of this transaction only for the account given. (Note: In your answer to each part of this problem, consider this to be the only transaction that took place during 2012.)

1. Quale issued 200 shares of common stock in exchange for cash of $4,000.

a. Entry

b. Paid-in Capital in Excess of Par, Common Stock

2. Quale issued 200 shares of preferred stock at a price of $102 per share.

a. Entry

b. Paid-in Capital in Excess of Par, Preferred Stock

3. Quale issued 500 shares of common stock in exchange for a building. The common stock is not actively traded, but the building was recently appraised at $11,000.

a. Entry

b. Property, Plant, and Equipment

4. Quale reacquired 1,000 shares of common stock from a stockholder for $23,000 and subsequently reissued the shares to a different investor for $21,500.

a. Entries

b. Paid-In Capital, Treasury Stock

5. The board of directors declared dividends of $75,000. This amount includes the current year dividend preference on preferred stock, with the remainder to be paid to common shareholders.

a. Entry

b. Retained Earnings

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...