Feb. I Issued 7,000 shares of common stock for $42,000. Mar. 20 Purchased 1,400 additional shares of common treasury stock at $7 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1 . Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a 5050 per share cash dividend to common stockholders of record on December 15, payable December 31,2 Dec 31 Determined that net income for the year was $392,000, Paid the dividend declared on December 1.
Answer:
1. Common stock,
2. Treasury stock,
3. Cash dividend,
4. Preferred stock,
5. Net income
1. On February 1, the company issued 7,000 shares of common stock for $42,000. This means that the company sold 7,000 shares to investors in exchange for $42,000.
2. On March 20, the company purchased 1,400 additional shares of common treasury stock at $7 per share. Treasury stock refers to shares of a company’s own stock that it has repurchased. In this case, the company bought 1,400 shares of its own stock for $7 per share.
3. On October 1, the company declared a 7% cash dividend on preferred stock. Preferred stock is a type of stock that typically has certain privileges over common stock, such as a fixed dividend rate. In this case, the company declared a cash dividend equal to 7% of the preferred stock’s value. This dividend is payable on November 1.
4. On November 1, the company paid the dividend that was declared on October 1. This means that the company distributed the cash dividend to the preferred stockholders.
5. On December 1, the company declared a $0.50 per share cash dividend to common stockholders. Common stock is the most basic form of stock and represents ownership in a company. In this case, the company declared a cash dividend of $0.50 for each share of common stock held by the stockholders of record on December 15. This dividend is payable on December 31.
6. On December 31, the company determined that its net income for the year was $392,000. Net income refers to the company’s total earnings after deducting all expenses. In this case, the company’s net income for the year was $392,000.
7. The company also paid the dividend that was declared on December 1. This means that the company distributed the cash dividend to the common stockholders on December 31.
These transactions involve the issuance and repurchase of common stock, declaration and payment of cash dividends on preferred and common stock, and the determination of net income for the year.