Western Corporation received a charter that authorized the issuance of 100,000 shares of $10 par common stock and 50,000 shares of $50 par, 5 percent cumulative preferred stock. Western Corporation completed the following transactions during its first two years of operation:
2013 :
Jan. 5 Sold 5,000 shares of the $10 par common stock for $15 per share.
12 Sold 1,000 shares of the 5 percent preferred stock for $55 per share.
Apr. 5 Sold 30,000 shares of the $10 par common stock for $20 per share.
Dec. 31 During the year, earned $140,000 in cash revenue and paid $85,000 for cash operating expenses.
31 Declared the cash dividend on the outstanding shares of preferred stock for 2013. The dividend will be paid on February 15 to stockholders of record on January 10, 2014.
31 Closed the revenue, expense, and dividend accounts to the retained earnings account.
2014 :
Feb. 15 Paid the cash dividend declared on December 31, 2013.
Mar. 3 Sold 20,000 shares of the $50 par preferred stock for $56 per share.
May 5 Purchased 900 shares of the common stock as treasury stock at $21 per share.
Dec. 31 During the year, earned $190,000 in cash revenues and paid $75,000 for cash operating expenses.
31 Declared the annual dividend on the preferred stock and a $0.60 per share dividend on the common stock.
31 Closed revenue, expense, and dividend accounts to the retained earnings account.
Required:
a. Prepare journal entries for these transactions for 2013 and 2014 and post them to T-accounts.
b. Prepare the balance sheets at December 31, 2013 and 2014.
c. What is the number of common shares outstanding at the end of 2013? At the end of 2014? How many common shares had been issued at the end of 2013? At the end of 2014? Explain any differences between issued and outstanding common shares for 2013 and for 2014.