Question

1. Entries for Selected Corporate Transactions

   Selected transactions completed by ATV Discount Corporation during the current fiscal year are as follows:

   Instructions:

   Journalize the transactions. If no entry is required, select "No Entry Required" from the dropdown box and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

   Jan. 5. Split the common stock 5 for 1 and reduced the par from $175 to $35 per share. After the split, there were 750,000 common shares outstanding.

   Date	Account	Debit	Credit
   Jan. 5.

   Mar. 10. Purchased 60,000 shares of the corporation's own common stock at $39, recording the stock at cost.

   Date	Account	Debit	Credit
   Mar. 10.

   Apr. 30. Declared semiannual dividends of $2.4 on 40,000 shares of preferred stock and $0.16 on the common stock to stockholders of record on May 15, payable on June 15.

   Date	Account	Debit	Credit
   Apr. 30.

   June 15. Paid the cash dividends.

   Date	Account	Debit	Credit
   June 15.

   Aug. 20. Sold 43,000 shares of treasury stock at $44, receiving cash.

   Date	Account	Debit	Credit
   Aug 20.

   Oct. 15. Declared semiannual dividends of $2.4 on the preferred stock and $0.22 on the common stock (before the stock dividend).

   Date	Account	Debit	Credit
   Oct. 15.

   Oct. 15. A 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $46.

   Date	Account	Debit	Credit
   Oct. 15.

   Dec. 19. Paid the cash dividends.

   Date	Account	Debit	Credit
   Dec. 19.

   Dec. 19. Issued the certificates for the common stock dividend.

   Date	Account	Debit	Credit
   Dec. 31.

Answer 1

Jan. 5. Split the common stock 5 for 1 and reduced the par from $175 to $35 per share. After the split, there were 750,000 common shares outstanding.

Solution: No entry required

Mar. 10. Purchased 60,000 shares of the corporation's own common stock at $39, recording the stock at cost

Date	Account	Debit	Credit
Mar. 10.	Treasure Stock A/c	2340000
	To Cash A/c		2340000

.Shares repurchased are considered as Treasury stock and removed from the common outstanding shares category.

Apr. 30. Declared semiannual dividends of $2.4 on 40,000 shares of preferred stock and $0.16 on the common stock to stockholders of record on May 15, payable on June 15.

Date	Account	Debit	Credit
Apr. 30.	Retained Earning A/c	206400
	To Dividend Payable on Common Stock		110400
	To Dividend Payable on Preferred Stock		96000

Dividend on 690000 (750000 - 60000) Common Stock and 40000 Preferred Stock

June 15. Paid the cash dividends.

Date	Account	Debit	Credit
June 15.	Dividend Payable on Preferred Stock	96000
	Dividend Payable on Common Stock	110400
	To cash A/c		206400

Aug. 20. Sold 43,000 shares of treasury stock at $44, receiving cash.

Date	Account	Debit	Credit
Aug 20.	Cash A/c	1892000
	To Treasury Stock A/c		1677000
	To Paid-In Capital from Treasury Stock		215000

Treasure stock costing $39 per shares were sold at $44 per share.

Oct. 15. Declared semiannual dividends of $2.4 on the preferred stock and $0.22 on the common stock (before the stock dividend).

Date	Account	Debit	Credit
Oct. 15.	Retained Earnings A/c	257260
	To Dividend Payable on Common Stock		161260
	To Dividend Payable on Preferred Stock		96000

Common Stock = (750000 - 60000 + 43000) = 733000

Oct. 15. A 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $46.

Date	Account	Debit	Credit
Oct. 15.	Retained earnings A/c	674360
	To Common Stock Dividend distributable		516540
	To Paid in capital In excess of Par		157820

Market Value of Common Stock dividend = 733000 shares * 2% * 46 = 674360

PAR Value of common stock dividend = 2% * [(690000 * 35) + (43000 * 39) ]

= 516540

Dec. 19. Paid the cash dividends.

Date	Account	Debit	Credit
Dec. 19.	Dividend Payable on Preferred Stock	96000
	Dividend Payable on Common Stock	161260
	To cash A/c		257260

Dec. 19. Issued the certificates for the common stock dividend.

Date	Account	Debit	Credit
Dec.19	Common Stock Dividend Distributable	516540
	To Common Stock		516540