Issuance, Repurchase, and Resale of Capital Stock
Papa Tom’s Company had the following transactions occur during 2008:
(a) Issued 10,000 shares of common stock to the founders for land valued at $350,000.Par value of the common stock is $1 per share.
(b) Issued 2,000 shares of $100 par preferred stock for cash at $115.
(c) Sold 3,000 shares of common stock to the company president for $50 per share.
(d) Purchased 500 shares of outstanding preferred stock issued in (b) for cash at par.
(e) Purchased 1,000 shares of the outstanding common stock issued in (a) for $42 per share.
(f) Reissued 200 shares of repurchased preferred stock at $104.
(g) Reissued 400 shares of reacquired common stock for $50 per share.
(h) Repurchased 100 shares of the common stock sold in (g) for $47 per share. These same
100 shares were later reissued for $45 per share.
Instructions:
1. Prepare the necessary entries to record the preceding transactions involving PapaTom’s preferred stock. Assume that the par value method is used for recording treasury stock.
2. Prepare the necessary entries for the common stock transactions assuming that the cost method is used for recording treasury stock.