Question

On January 1, 2017, Thomson Inc. had the following account balances in its shareholders' equity accounts.

​​

​​Common stock, $1 par, 350,000 shares issued of

which 20,000 Shares being held as treasury stock $350,000​

​​Paid-in capital excess of par, common​   500,000​

​​Preferred stock, $100 par, 10,000 shares outstanding 1,000,000​

Paid-in capital excess of par, preferred ​   100,000​

​​Retained earnings​   2,000,000​

​​Treasury stock, at cost, 20,000 shares​   60,000​

​​  

During 2017, Thomson Inc. had several transactions relating to common stock.

2/10	Declared a property dividend, payable in Welch company stock. The Welch stock had been purchased early in 2016 for $30,000 and was reported as an asset at a fair value of $35,000 on 12/31/16balance sheet. The market value of Welch stock is $38,000 on 2/10/17.
3/17	Distributed the property dividend.
3/20	Reissued 5,000 shares of treasury stock at $5 per share.
4/17	Declared a 3 for 1 stock split on common stock effective 4/24.
7/18	Declared and distributed a 10% stock dividend on outstanding common stock; market value per share, $7.
11/1	Declared a $0.5 per share cash dividend on the outstanding common shares.
11/25	Ex-dividend date for the cash dividend
11/29	Date of record for the cash dividend.
12/20	Paid the cash dividend declared on 11/1.

​​Required:

Record the above transactions and events in the journal entry format.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
10-Feb	Loss on investment ($38000 - $30000)	$           8,000.00
	Investment in Welch Co.		$      8,000.00
	Retained earnings	$         38,000.00
	Property dividend payable		$    38,000.00
17-Mar	Property dividend payable	$         38,000.00
	Investment in Welch Co.		$    38,000.00
20-Mar	Cash (5000 x $5)	$         25,000.00
	Treasury Stock (5000 x $3)		$    15,000.00
	Paid-in Capital from Treasury Stock		$    15,000.00
17-Apr	Retained earnings [(350,000 – 20,000) x $1]	$      3,30,000.00
	Common Stock		$ 3,30,000.00
18-Jul	Retained earnings [(10% x 990,000) x $7]	$      6,93,000.00
	Common stock [(10% x 990,000) x $1]		$    99,000.00
	Paid-in capital - excess of par		$ 5,94,000.00
After Stock split outstanding shares = $330,000 x 3 = $990,000
01-Nov	Retained earnings ( 990,000  + 99000 )x $.50)	$      5,44,500.00
	Cash dividends payable		$ 5,44,500.00
25-Nov	No journal entry is passed on the ex-dividend date
29-Nov	No journal entry is required to be made on record date
20-Dec	Cash dividends payable	$      5,44,500.00
	Cash		$ 5,44,500.00