Chapter 14 Problem

 

Ward Corporation is authorized by the State of Washington to issue 100,000 shares of $10 par common stock and 1000 shares of 8% $100 par preferred stock.

 

In January, Ward issued 10,000 shares of the common stock at $20 per share.  Additionally, Ward issued all 1000 of the preferred shares at par.

 

For the current year, Ward had net income of $80,000.

 

In November, Ward purchased 500 shares of its own common stock, to be used for executive compensation.  These shares were purchased for $30 per share.

 

Questions

 

1.   Show the journal entries for the transactions listed above.

2.   How many shares were authorized, issued and outstanding as of the end of the year?

3.   Can you create a stockholders’ equity section of the balance sheet for this situation?

4.   Can you calculate the book value of the common shares?