Twin Lakes incorporated on April 01, 2015, and was authorized to issue 100,000 shares of $5 par value common stock and 10,000 shares of $8, no-par preferred stock. During the remainder of 2015, the company entered into the following transactions:
1. Issued 25,000 shares of common stock in exchange for $500,000 cash.
2. Issued 5,000 shares of preferred stock in exchange for $60,000 cash.
3. Purchased 3,000 common shares for $15 per share and held them in the form of treasury stock.
4. Sold 1,000 treasury stock shares for $18 per share on the open market.
5. Issued 1,000 treasury shares to executives who exercised stock options for a reduced price of $5 per share.
The company entered into no other transactions that affected the shareholders' equity during 2015.
a. Prepare the journal entries for each of the transactions.
Cash (+A) 500,000
Common Stock (+CC) 500,000
Issued common stock (25,000 x $20)
Cash(+A) 60,000
Preferred Stock (+CC) 60,000
Issued preferred stock (5,000 x $12)
Treasury Stock (-CC) 45,000
Cash (-A) 45,000
Purchased treasury stock (3,000 x $15)
Cash (+A) 18,000
Treasury Stock (+CC) 15,000
Additional Paid-In Capital, T/S (+CC) 3,000
Reissued treasury stock (1,000 x $15; 1,000 x $3)