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The stockholders’ equity accounts of Riverbed Corp on January 1, 2022, were as follows. Preferred Stock...

The stockholders’ equity accounts of Riverbed Corp on January 1, 2022, were as follows.

Preferred Stock (7%, $100 par noncumulative, 15,000 shares authorized) $900,000
Common Stock ($4 stated value, 900,000 shares authorized) 3,000,000
Paid-in Capital in Excess of Par Value—Preferred Stock 45,000
Paid-in Capital in Excess of Stated Value—Common Stock 1,440,000
Retained Earnings 2,064,000
Treasury Stock (15,000 common shares) 120,000


During 2022, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb. 1 Issued 15,000 shares of common stock for $90,000.
Mar. 20 Purchased 3,000 additional shares of common treasury stock at $7 per share.
Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1.
Nov. 1 Paid the dividend declared on October 1.
Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022.
Dec. 31 Determined that net income for the year was $820,000. Paid the dividend declared on December 1.

Questions:

1.) Journalize these transactions.

Solutions

Expert Solution

Date Account Titles and Explanation Debit Credit
Feb.1 Cash $    90,000
       Common stock (15,000*$4) $    60,000
       Paid-In-Capital in Excess of Stated Value- Common Stock ($90,000-$60,000) $    30,000
(To record the issue of common stock)
Mar.20 Treasury Stock (3,000*$7) $    21,000
     Cash $    21,000
(To record the purchase of treasury stock)
Oct.1 Cash Dividends ($900,000*7%) $    63,000
      Dividends Payable $    63,000
(To record the dividends declared)
Nov.1 Dividends Payable $    63,000
     Cash $    63,000
(To record the dividends paid)
Dec.1 Cash Dividends $ 373,500
      Dividends Payable $ 373,500
(To record the dividends declared)
Dec.31 Income Summary $ 820,000
      Retained Earnings $ 820,000
(To close the net income)
Dec.31 Retained Earnings $ 436,500
      Cash Dividends ($63,000 + $373,500) $ 436,500
(To close the dividends account)
Dec.31 Dividends Payable $ 373,500
     Cash $ 373,500
(To record the dividends paid)

.

Note:
Shares issued on January 1 = $3,000,000/$4)
Shares issued on January 1 = 750,000
Shares outstanding on January 1 = 750,000 - 15,000 = 735,000
Cash dividends on Dec. 1 = (735,000 + 15,000 - 3,000)*$0.50
Cash dividends on Dec. 1 = $373,500

ekkarill92 answered 1 year ago
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