Question

1.) Winnie the Pooh Inc. issues 5,000 shares of $2 par common stock for $75 a share and 10,000 shares of $6 par preferred stock for $88 dollars per share. Journalize the issuance of these stocks:

2.) Winnie the Pooh Inc. the most generous of the companies declares a $200,000 cash dividend on April 1st, 2020. The company has 10,000 shares of $5 par common stock with a market value of $25 per share and 20,000 shares of $10 par 8% preferred stock with a $60 market value per share. The preferred stock is cumulative, and dividends were not paid in 2019. The date of record is April 20th, and the payment date is April 29th. Make the necessary journal entry showing exactly which shareholders will receive how much of each dividend, also be sure to perform the correct entry on the correct date: April 1st, 2020 journal entry: April 20th, 2020 journal entry: April 29th, 2020 journal entry:

Answer 1

	If you find the answer useful please like my answer
1)
	Date	Account title and Explanation	Debit $	Credit $
		Cash	1,255,000
		Common Stock - $2 par value		10,000
		Paid in capital in excess of par - Common stock		365,000
		Preferred Stock - $2 par value		60,000
		Paid in capital in excess of par - Preferred Stock		820,000
		(To record the issue of common stock and preferred stock)
2)	Since the preferred stock are cumulative in nature the preferred dividend for 2019 is not declared then in the current year the Company should pay then preferred dividend for 2019 first and then preferred dividend for 2020 then only the dividend can be declared for common stock
	Cell Reference	Particulars	Debit $
	A	No of Preferred Stock	20,000
	B	Par value	10
	C=A*B	value of Preferred Stock	200,000
	D	Preferred Dividend percentage	8%
	E=C*D	Annual Preferred Dividend	16,000
	F	Preferred Dividend for 2019	16,000
	G	Preferred Dividend for 2020	16,000
	H=G+F	Total Preferred dividend to be declared in the current year	32,000
	I	Total dividend declared	200,000
	J=I-H	Dividend for common stockholders	168,000
	Date	Account title and Explanation	Debit $	Credit $
	April 20, 2020	Retained Earning	200,000
		Dividend payable -Common Stock		168,000
		Dividend payable -Preferred Stock		32,000
		(To record the declaration of dividend)
	Date	Account title and Explanation	Debit $	Credit $
	April 29, 2020	Dividend payable -Common Stock	168,000
		Dividend payable -Preferred Stock	32,000	-
		Cash		200,000
		(To record the payment of dividend)