Question

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

Jan.	5.	Split the common stock 4 for 1 and reduced the par from $20 to $5 per share. After the split, there were 4,000,000 common shares outstanding.
Mar.	10.	Purchased 100,000 shares of the corporation’s own common stock at $30, recording the stock at cost.
Apr.	30.	Declared semiannual dividends of $0.25 on 30,000 shares of preferred stock and $0.08 on the common stock to stockholders of record on May 15, payable on June 15.
June	15.	Paid the cash dividends.
Aug.	20.	Sold 60,000 shares of treasury stock at $40, receiving cash.
Oct.	15.	Declared semiannual dividends of $0.25 on the preferred stock and $0.08 on the common stock (before the stock dividend). In addition, a 1% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $35. 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.

CHART OF ACCOUNTS

ATV Discount Corporation

General Ledger

ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 350 Stock Dividends Distributable 351 Cash Dividends 352 Stock Dividends 390 Income Summary 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. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Answer 1

Solution :

Journal Entries - ATV Discount Corporation
Date	Particulars	Debit	Credit
5-Jan	No Entry
10-Mar	Treasury stock Dr (100000*$30)	$3,000,000.00
	To Cash		$3,000,000.00
	(To record purchase of own stock)
30-Apr	Cash Dividends Dr [(30000*$0.25) + (4000000-100000)*$0.08]	$319,500.00
	To Cash Dividends Payable		$319,500.00
	(To record dividend declared)
15-Jun	Cash Dividends Payable Dr	$319,500.00
	To Cash		$319,500.00
	(To record payment of dividends)
20-Aug	Cash Dr (60000*$40)	$2,400,000.00
	To Treasury stock (60000*$30)		$1,800,000.00
	To Paid-In Capital from Sale of Treasury Stock (60000 * $10)		$600,000.00
	(To record reissue of treasury stock)
15-Oct	Dividends Dr [(30000*$0.25) + (4000000-40000)*$0.08]	$324,300.00
	To Dividend Payable		$324,300.00
	(To record dividend declared)
15-Oct	Stock dividends Dr [(4000000 - 40000)*1%*$35]	$1,386,000.00
	To Stock Dividends Distributable (39600*$5)		$198,000.00
	To Paid-In Capital in Excess of Par-Common Stock(39600*$30)		$1,188,000.00
	(To record stock dividend declared)
19-Dec	Dividend Payable Dr	$324,300.00
	To Cash		$324,300.00
	(To record payment of dividends)
19-Dec	Stock dividend distributable Dr	$198,000.00
	To Common stock		$198,000.00
	(To record stock dividend distributed)