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 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,150,500 common shares outstanding.
Mar. 10. Purchased 41,400 shares of the corporation’s own common stock at $28, recording the stock at cost.
Apr. 30. Declared semiannual dividends of $0.80 on 74,100 shares of preferred stock and $0.12 on the common stock to stockholders of record on May 15, payable on June 15.
June 15. Paid the cash dividends.
Aug. 20. Sold 29,000 shares of treasury stock at $33, receiving cash.
Oct. 15 Declared semiannual dividends of $0.80 on the preferred stock and $0.12 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $36. 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.

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Expert Solution

Solution:

Journal Entries - ATV Discount Corporation
Date Particulars Debit Credit
5-Jan No Entry Required
10-Mar Treasury stock Dr (41400*$28) $1,159,200.00
      To Cash $1,159,200.00
(To record purchase of own stock)
30-Apr Cash Dividends Dr [(74100*$0.80) + (1150500-41400)*$0.12] $192,372.00
      To Cash Dividend Payable $192,372.00
(To record dividend declared)
15-Jun Cash Dividend Payable Dr $192,372.00
      To Cash $192,372.00
(To record payment of dividends)
20-Aug Cash Dr (29000*$33) $957,000.00
      To Treasury stock (29000*$28) $812,000.00
      To Paid in capital from sale of treasury stock $145,000.00
(To record reissue of treasury stock)
15-Oct Cash Dividends Dr [(74100*$0.80) + (1150500-12400)*$0.12] $195,852.00
      To Cash Dividend Payable $195,852.00
(To record dividend declared)
15-Oct Stock dividends Dr [(1150500 - 12400)*2%*$36] $819,432.00
      To Stock dividend distributable $569,050.00
      To Paid in capital in excess of par - common stock $250,382.00
(To record stock dividend declared)
19-Dec Cash Dividend Payable Dr $195,852.00
      To Cash $195,852.00
(To record payment of dividends)
19-Dec Stock dividend distributable Dr $569,050.00
      To Common stock $569,050.00
(To record stock dividend distributed)

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