Reference no: EM131712271

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)