What is the par value per share of Terrific’s preferred stock?

Sources of equity, stock issuance, and dividends

Terrific Comfort Specialists, Inc., reported the following stockholders’ equity on its

balance sheet at June 30, 2012:

TERRIFIC COMFORT SPECIALISTS, INC. Stockholders’ Equity June 30, 2012

Paid-in Capital:

Preferred stock, 5%, ? par, 650,000 shares authorized, 280,000 shares issued

$ 1,400,000

Common stock, par value $1 per share, 5,000,000 shares authorized, 1,350,000 shares issued and outstanding

1,350,000

Paid in capital in excess of par—common

2,400,000

Total paid-in capital

5,150,000

Retained earnings

12,300,000

Total stockholders’ equity

$ 17,450,000

Requirements

1.Identify the different issues of stock that Terrific has outstanding.

2.What is the par value per share of Terrific’s preferred stock?

3.Make two summary journal entries to record issuance of all the Terrific stock for cash. Explanations are not required.

4.No preferred dividends are in arrears. Journalize the declaration of a $600,000 dividend at June 30, 2012. Use separate Dividends payable accounts for preferred and common. An explanation is not required.

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