Accounting week 4

Exercise 11-5

Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.

On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 11-5A

Pringle Corporation has been authorized to issue 21,700 shares of $100 par value, 9%, noncumulative preferred stock and 1,059,400 shares of no-par common stock.

The corporation assigned a $5 stated value to the common stock. At December 31, 2014, the ledger contained the following balances pertaining to stockholders’ equity.

The preferred stock was issued for $186,640 cash. All common stock issued was for cash. In November 3,450 shares of common stock were purchased for the treasury at a per share cost of $10. No dividends were declared in 2014.

Prepare the journal entries for the following. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 11-5A

Pringle Corporation has been authorized to issue 21,700 shares of $100 par value, 9%, noncumulative preferred stock and 1,059,400 shares of no-par common stock.

The corporation assigned a $5 stated value to the common stock. At December 31, 2014, the ledger contained the following balances pertaining to stockholders’ equity.

The preferred stock was issued for $186,640 cash. All common stock issued was for cash. In November 3,450 shares of common stock were purchased for the treasury at a per share cost of $10. No dividends were declared in 2014.

Prepare the journal entries for the following. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Calculate the payout ratio and return on common stockholders’ equity. (Round answers to 1 decimal place, e.g. 12.5%.)