The Gray Company lists the following stockholders’ equity items on its December 31, 2006 balance sheet:Preferred stock, 8%, $100 par ……………. $120,000Common stock, $10 par ………………. 180,000Additional paid-in capital on preferred stock ……….. 21,600Additional paid-in capital on common stock ………… 90,000Total contributed capital ………………………. $411,600Retained earnings …………………………. 230,000Accumulated other comprehensive incomeUnrealized increase in value of available-for-sale securities ………….. 6,000Contributed capital, retained earnings, and accumulated other comprehensive income . $647,600Less: Treasury stock (2,000 shares of common at $21 per share, acquired on March 3, 2006) . (42,000)Total Stockholders’ Equity ……………………. $605,600The following stock transactions occurred during 2007:Jan. 2 Issued 3,000 shares of common stock at $25 per share.Jan. 30 Paid the annual 2006 per share dividend on preferred stock and the $2 per share dividend on common stock.These dividends had been declared on December 31, 2006.Mar. 2 Issued 400 shares of preferred stock at $125 per share.May 7 Reissued 600 shares of treasury stock at $24 per share.June 15 Split the common stock two for one, reducing the par value to $6 per share.July 2 Declared a 5% stock dividend on the outstanding common stock, to be issued on August 3. The stock is selling for $14 per share.Aug. 3 Issued the stock dividend.Oct. 1 Declared a property dividend payable to common stockholders on November 1. The dividend consists of 2,000 shares of an investment in Lamb Company available-for-sale common stock, which had been acquired at a cost of $12 per share and which have a carrying value of $15 per share. The stock is currently selling for $16 per share.Nov. 1 Issued the property dividend to common stockholders.Dec. 31 Declared the annual per share dividend on the outstanding preferred stock and a $1 per share dividend on the outstanding common stock, to be paid on January 30, 2008.Required1. Prepare journal entries to record the preceding transactions.2. Prepare the December 31, 2007 stockholders’ equity section (assume that 2007 net income was $225,000).View Solution:
The Gray Company lists the following stockholders equity items



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