Question

Selected transactions completed by ATV Discount Corporation during the current fiscal year are as follows: Jan. 5. Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,051,500 common shares outstanding. Mar. 10. Purchased 41,200 shares of the corporation’s own common stock at $27, recording the stock at cost. Apr. 30. Declared semiannual dividends of $0.90 on 71,600 shares of preferred stock and $0.13 on the common stock to stockholders of record on May 15, payable on June 15. June 15. Paid the cash dividends. Aug. 20. Sold 28,500 shares of treasury stock at $34, receiving cash. Oct. 15 Declared semiannual dividends of $0.90 on the preferred stock and $0.13 on the common stock (before the stock dividend). In addition, a 3% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38. The dividend date of record is November 15 payable on December 19. Dec. 19. Paid the cash dividends and issued the certificates for the common stock dividend. Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Date	Account title	Debit	credit
Jan 5	No entry is required .Stock split is not recorded in books .only book adjustment is made
Mar 10	Treasury stock (41200*27)	1112400
	cash		1112400
Apr30	Cash dividend	195779
	Cash dividend payable -preferred stock [71600*.90]		64440
	Cash dividend payable -common stock [(1051500-41200)*.13]		131339
May 15	No entry
June 15	Cash dividend payable -preferred stock	64440
	Cash dividend payable -common stock	131339
	cash		195779
Aug 20	Cash (28500*34)	969000
	paid in capital in excess of cost -treasury stock		199500
	Treasury stock (28500*27)		769500
Oct 15	cash dividend	199484
	Cash dividend payable -preferred stock [.90*71600]		64440
	Cash dividend payable -common stock [(1051500-41200+28500]*.13		135044
oct 15	Retained earning   [31164*38]	1184232
	Common stock dividend distributable [31164*25]		779100
	Paid in capital in excess of par -common stock		405132
Nov15	No entry
Dec 19	Cash dividend payable -preferred stock	64440
	Cash dividend payable -common stock	135044
	cash		199484
dec 19	Common stock dividend distributable	779100
	Cash		779100

**common shares outstanding at time of stock dividend = 1051500-41200+28500 = 1038800

stock dividend = 1038800*3%=31164 shares