SITUATION TWO - 70 points
In Jan 1, information of Charles J. Company, the information reported the following amounts in the Stockholders' Equity Section of its December 31, 2025, in the Balance Sheet
Preferred stock, $23 par value 110,000 shares authorized, 4,000 shares outstanding and issued
Common stock, $5 par value, 110,000 authorized, 54,500 shares outstanding and issued
Additional Paid in Capital
To Preferred Stock
To Common Stock
Total Capital Stock and Additional Paid in Capital
Retained Earnings
Total Stockholders' Equity
$92,000
$272,500
$100,000
$100,000
$200,000
$564,500
$955,000
$1,519,500
During 2026, Charles J. Company took part in the following transactions concerning stockholders' equity
1. Issued 10,000 shares of PS for $100.
2. Issued 10,000 shares of CS for $43.
3. Declared cash dividends for common stock shares for $5 and $7 for preferred stock shares.
4. Record cash dividends of transaction 3.
5. Issued 10,000 shares of CS for $50 and 5,000 for PS for $90.
6. Paid cash dividend for transactions 3.
7. Purchased 2,000 shares of its own outstanding CS shares for $35.
8. Issued 10,000 shares of PS for $50.
9. Reissued 1,000 shares of TS (transaction 7) for $55.
10. Reissued 1,000 shares of TS (transaction 7) for $30
11. Record the close net income for the year $245,000 (Hint uses Income Summary).
12. Declared the annual 2026 dividend on preferred stock at $0.50 and the $0.25 per share dividend on common stock share. The dividends are record and paid in the 2027.
Instructions
a. Prepare journal entries to record the transactions described above.
b. Prepare the December 31, 2026, Stockholders' Equity Section for the Balance Sheet.
