Question - On December 31, 2014, Rayco Inc. had the following balances (all balances are normal):
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Accounts
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Amount
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Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding)
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$1,000,000
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Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding)
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$1,000,000
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Paid-in Capital in Excess of par, Common
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150,000
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Retained Earnings
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700,000
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The following events occurred during 2014 and were not recorded:
1. On January 1, Rayco declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.
2. On February 15, Rayco reacquired 1,000 shares of common stock for $20 each.
3. On March 31, Rayco reissued 250 shares of treasury stock for $25 each.
4. On July 1, Rayco reissued 500 shares of treasury stock for $16 each.
5. On October 1, Rayco declared full year dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15.
6. On December 15, Rayco split common stock 2 shares for 1.
7. Net Income for 2014 was $275,000.
Requirements:
1. Prepare journal entries for the transactions listed above.
2. Prepare a Stockholders' section of a classified balance sheet as of December 31, 2014.