Question

In: Accounting

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

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.

Solutions

Expert Solution

Journal Entries
Date Accouting titles & Explanations Debit Credit
5-Jan No entry
10-Mar Treasury stock        3,000,000
Cash (100,000*30)        3,000,000
30-Apr Cash dividend            319,500
Dividends payable            319,500
(preferred shares 30,000*.25   = 7500
(Common shares 3,900,000*.08= 312000
15-Jun Dividends payable            319,500
cash            319,500
20-Aug Cash (60000*40)        2,400,000
Treasury stock (60,000*30)        1,800,000
paid in capital from sale of treasury stock            600,000
15-Oct
Cash dividend            324,300
Dividends payable            324,300
(preferred shares 30,000*.25   = 7500
(Common shares 3,960,000*.08= 316800
15-Oct Stock dividends (39,600*35)        1,386,000
Stock dividends distributable (39,600*5)            198,000
paid in capital in excess of par-CS        1,188,000
(3,960,000*1%= 39600 shares)
19-Dec Dividends payable            324,300
cash            324,300
19-Dec Stock dividend distributable            198,000
Common Stock            198,000

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