Reference no: EM131900552

Problem

Layes Corporation has been authorized to issue 20,000 shares of $100 par value, 7%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2017, the ledger contained the following balances pertaining to stockholders' equity.

Preferred Stock	$ 150,000
Paid-in Capital in Excess of Par Value-Preferred Stock	20,000
Common Stock	2,000,000
Paid-in Capital in Excess of Stated Value-Common Stock	1,520,000
Treasury Stock (4,000 common shares)	36,000
Retained Earnings	82,000
Accumulated Other Comprehensive Income	51,000

The preferred stock was issued for $170,000 cash. All common stock issued was for cash. In November 4,000 shares of common stock were purchased for the treasury at a per share cost of $9. No dividends were declared in 2017.

Instructions

(a) Prepare the journal entries for the following.

1. Issuance of preferred stock for cash.
2. Issuance of common stock for cash.
3. Purchase of common treasury stock for cash.

(b) Prepare the stockholders' equity section of the balance sheet at December 31, 2017.