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.

Answer 1

	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