Question

Feb. 21: Issued 50,000 shares of common stock in exchange for equipment. The list price of the equipment was $950,000, and the stock market price was $18 per share.

May 10: Declared and distributed a 5-for-4 stock split, effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $20 per share.

Aug. 15: Declared a $2.50 per share dividend to common shareholders of record on August 31, payable on September 5.

Oct. 20: Declared and distributed a 10% stock dividend on the common stock. The market price of the common stock was $21 per share.

REQUIRED:

[1] Record the transactions in journal entry format.
[2] Determine the ending [12/31] balances in the [a] common stock account, [b] paid-in capital excess, common account, and [c] the number of shares authorized, issued and outstanding.

Answer 1

Date	Accounts title	DR	Cr
Feb-21	Equipment	$900,000
	Common stock (50000*1)		$50,000
	paid in capital excess common stock (50000*17)		850000
	(being common stock issued)
May-10	No journal entry required as it’s a stock spilt
	Only a memo entry is required.
	After stock spilt the par value is $.8 (62500/50000) and common stock is 62500 shares
	working
	For every 4 , 5 stock is issued
	Total shares
	50000/4*5	62500
	Less: Balance of common stock	50000
	Additional shares are	12500
Aug-15	Retained Earning	156250
	Dividend payable (62500*2.5)		156250
	(being dividend declared recorded)
Oct-10	Retained Earning	131250
	Stock dividend payable (62500*10%*.8)		5000
	paid in capital excess common stock (62500*10%*20.2)	126250
ans 2	ending balance
	Common stock	68750
	paid-in capital excess, common account	976250
	(850000+126250)
	No. of shares authorized issued and outstsnding	68750
If any doubt please comment