Hernandez Company had the following transactions during 2020, its first year in business: January 2 Issued 42,000 shares of $15 par common stock for $36 per share.
April 3 Issued 8,000 shares of $70 par preferred stock for $97 per share.
October 6 Purchased 2,000 shares of treasury stock for $29 per share.
December 9 Reissued 110 shares of treasury stock for $35 per share.

Question Completion:

Prepare Journal Entries.

Hernandez Company

Journal Entries:

January 2 Debit Cash $1,512,000

Credit Common stock $630,000

Credit Additional Paid-in Capital-Common stock $882,000

To record the issuance of 42,000 shares of $15 par common stock for $36 per share.

April 3 Debit Cash $ 776,000

Credit Preferred stock $560,000

Credit Additional Paid-in Capital-Preferred stock $216,000

To record the issuance of 8,000 shares of $70 par preferred stock for $97 per share.

October 6 Debit Treasury Stock $30,000

Debit Additional Paid-in Capital-Common stock $28,000

Credit Cash $58,000

To record the repurchase of 2,000 shares of treasury stock for $29 per share.

December 9 Debit Cash $3,850

Credit Treasury stock $1,650

Credit Additional Paid-in Capital-Common stock $2,200

To record the reissuance of 110 shares of treasury stock for $35 per share.

Explanation:

a) Data and Analysis:

January 2 Cash $1,512,000 Common stock $630,000 Additional Paid-in Capital-Common stock $882,000

issuance of 42,000 shares of $15 par common stock for $36 per share.

April 3 Cash $ 776,000 Preferred stock $560,000 Additional Paid-in Capital-Preferred stock $216,000

issuance of 8,000 shares of $70 par preferred stock for $97 per share.

October 6 Treasury Stock $30,000 Additional Paid-in Capital-Common stock $28,000 Cash $58,000

repurchase of 2,000 shares of treasury stock for $29 per share.

December 9 Cash $3,850 Treasury stock $1,650 Additional Paid-in Capital-Common stock $2,200

re-issue of 110 shares of treasury stock for $35 per share.

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