Prepare Journal Entries to Record Each of the Following Year

question 35

Essay

Prepare journal entries to record each of the following Year 1 transactions for Satar Co.
a.Issue 12,000 shares of common stock with a par value of $2 for $5 a share.
b.Issue 30 shares of 8% cumulative preferred stock with a par value of $1,000 for $1,100 a share.
c.Pay dividends of $10,000 with cash.
d.Repurchase 1,000 shares of common stock for $6 a share.
e.Resell 400 shares of the treasury stock for $7 a share.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency of the business.

Loan Defaults

Occurs when a borrower fails to meet the legal obligations or conditions of a loan agreement.

Realization

The process of converting non-cash assets into cash, often recognized in accounting when revenue is earned and not necessarily when cash is received.