The Following Is an Extract from the Balance Sheet as at December

question 10

Essay

The following is an extract from the balance sheet as at December 31,1011:
at $6 per share,250,000 authorized,25,000 issued and outstanding
The company did not declare dividends on preferred shares in 2011. Transactions in 2012 include the following:
i. March 15: Hewitt purchased 15,000 preferred shares on the stock exchange for $5.25 per share and held these in treasury.
ii. March 28: The company redeemed 5,000 preferred shares directly from shareholders.
iii. July 1: The market price of common shares shot up to $5 per share,so Hewitt decided to split the common shares two to one.
iv. August 1: Hewitt cancelled 14,000 preferred shares that were held in treasury.
v. December 31: The company declared dividends of $0.40 per common share.
Requirement:
Prepare the journal entries to record the above transactions. The company uses the single-transaction method to account for treasury shares.

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