Question

On January 1, 2021, Sikie Shoe Manufacturing Corporation had 60,000 shares of $5 par value common stock issued and outstanding and 10,000 6% $50 cumulative preferred stock issued and outstanding. During the year, the following transactions occurred:

3/1/2021 Declared a 20% stock dividend on outstanding common stock to stock holders of record March 15. The market price per share as of March 1 is $18

4/1/2021 The 20% stock dividend declared on March 1 was issued to the common stockholders.   

4/10/2021 Declared cash dividend to preferred stockholders of record on April 20

4/30/2021 Paid preferred stockholders' dividend declared on April 10.

5/10/2021 Declared a 35% stock dividend on outstanding common stock to stockholders of record May 20. The market price per share as of May 10 is $25

5/30/2021 The 35% stock dividend declared on May 10 was issued to the common stockholders.

9/30/2021 A 3 for 1 stock split was announced for common stock holders on record as of October 15. The market price of the share was $90 on Sept 30

12/1/2021 Declared a cash dividend of $1.00 per share to common stockholders of record on Dec. 10

12/20/2021 Paid the $1.00 cash dividend to the common shareholders.

instructions:

a. Prepare journal entries to record each of the above transactions. If no entry is required, indicate so.

b. Prepare all closing entries at year-end.

Answer 1

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Date	Account	Debit	Credit
3/1/2021	Retained Earning (12,000*$18)	$   216,000
	Common Stock dividend distributable (12,000*$5)		$ 60,000
	Paid in capital in excess of par-Common		$156,000
	(To record declaration of stock dividend)
	No of Shares in Stock Dividend (60,000*20%)	12,000
4/1/2021	Common Stock dividend distributable (12,000*$5)	$     60,000
	Common Stock		$ 60,000
	(To record issuance of stock dividend)
4/10/2021	Preferred Stock Dividend (10,000*$50*6%)	$     30,000
	Preferred Stock Dividend Payable		$ 30,000
	(To record preferred stock dividend declaration)
4/30/2021	Preferred Stock Dividend Payable	$     30,000
	Cash		$ 30,000
	(To record payment of preferred dividend)
10/5/2021	Retained Earning (25,200*$25)	$   630,000
	Common Stock dividend distributable (25,200*$5)		$126,000
	Paid in capital in excess of par-Common		$504,000
	(To record declaration of stock dividend)
	No of Shares in Stock Dividend (72,000*35%)	25,200
30/5/2021	Common Stock dividend distributable	$   126,000
	Common Stock		$126,000
	(To record issuance of stock dividend)
9/30/2021	No Entry
	Existing Common Shares (60,000+12,000+25,200)	97,200
	No of shares after split (97,200*3)	291,600
	Par value will be half	$         2.50
12/1/2021	Common Stock Dividend (291,600*$1)	$   291,600
	Common Stock Dividend Payable		$291,600
	(To record Common stock dividend declaration)
12/20/2021	Common Stock Dividend Payable	$   291,600
	Cash		$291,600
	(To record payment of Common dividend)
Closing Entries:
12/31/2021	Retained Earning	$   321,600
	Preferred Stock dividend		$ 30,000
	Common Stock dividend		$291,600
	(To close dividned account)