Sources of equity, stock issuance, and dividends
Terrific Comfort Specialists, Inc., reported the following stockholders’ equity on its
balance sheet at June 30, 2012:
| TERRIFIC COMFORT SPECIALISTS, INC. Stockholders’ Equity June 30, 2012 | |
| Paid-in Capital: | |
| Preferred stock, 5%, ? par, 650,000 shares authorized, 280,000 shares issued | $ 1,400,000 |
| Common stock, par value $1 per share, 5,000,000 shares authorized, 1,350,000 shares issued and outstanding | 1,350,000 |
| Paid in capital in excess of par—common | 2,400,000 |
| Total paid-in capital | 5,150,000 |
| Retained earnings | 12,300,000 |
| Total stockholders’ equity | $ 17,450,000 |
Requirements
1.Identify the different issues of stock that Terrific has outstanding.
2.What is the par value per share of Terrific’s preferred stock?
3.Make two summary journal entries to record issuance of all the Terrific stock for cash. Explanations are not required.
4.No preferred dividends are in arrears. Journalize the declaration of a $600,000 dividend at June 30, 2012. Use separate Dividends payable accounts for preferred and common. An explanation is not required.
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