Dragonfly Corporation had the following equity accounts on December 31, 20x4:
7% cumulative, partially participating up to an additional
1%, preferred stock $100 par 20,000 shares issued and $2,000,000
outstanding
Common stock $10 par 40,000 shares issued and
outstanding 400,000
Paid-in capital common stock 1,000,000
Retained earnings $4,250,000
1) On February 15, 20x5 Dragonfly purchased 7,000 shares of its common stock for $40/share. It plans to either hold these shares temporarily or retire them so it decided to use the retirement method.
Record the journal entry for the buy back.
2) What would have been the journal entry here if the Company had used the treasury stock cost method to record the buy back?
3) On March 25, 20x5, Dragonfly reissued half of the treasury stock at $40/share (use retirement method). Prepare the appropriate journal entry.
4) On June 25, 20x5, Dragonfly reissued the remaining share of the treasury stock for $38/share (use retirement method). Prepare the appropriate journal entry.
5) The board of directors of Dragonfly declared $600,000 in dividends toward the end of the year. There were 2 years of dividends in arrears on the preferred stock. Calculate the dividends to be received by the preferred and common stockholders.