Question

The stockholders’ equity accounts of Pina Colada Corp. on January 1, 2017, were as follows.

Preferred Stock (7%, $100 par noncumulative, 4,150 shares authorized)		$249,000
Common Stock ($5 stated value, 345,000 shares authorized)		1,437,499
Paid-in Capital in Excess of Par Value—Preferred Stock		12,450
Paid-in Capital in Excess of Stated Value—Common Stock		552,000
Retained Earnings		694,000
Treasury Stock (4,150 common shares)		33,200

During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity.

Feb.	1		Issued 4,540 shares of common stock for $27,240.
Mar.	20		Purchased 1,450 additional shares of common treasury stock at $7 per share.
Oct.	1		Declared a 7% cash dividend on preferred stock, payable November 1.
Nov.	1		Paid the dividend declared on October 1.
Dec.	1		Declared a $0.65 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017.
Dec.	31		Determined that net income for the year was $276,600. Paid the dividend declared on December 1. Journalize the transcations

Answer 1

Solution:

Pina Colada Corporation - Journal Entries
Date	Particulars	Debit	Credit
1-Feb	Cash Dr	$27,240.00
	To Common stock		$22,700.00
	To Paid in capital in excess of stated value - Common stock		$4,540.00
	(To record issue of common stock)
20-Mar	Teasury stock Dr	$10,150.00
	To Cash		$10,150.00
	(To record purchase of own stock)
1-Oct	Dividends Dr	$17,430.00
	To Dividend Payable		$17,430.00
	(To record dividend declared)
1-Nov	Dividend payable Dr	$17,430.00
	To Cash		$17,430.00
	(To record dividend payment)
1-Dec	Dividends Dr [(287500 + 4540 - 4150 -1450)*$0.65]	$186,186.00
	To Dividend Payable		$186,186.00
	(To record dividend declared)
31-Dec	Dividend payable Dr	$186,186.00
	To Cash		$186,186.00
	(To record dividend payment)
31-Dec	Income summary Dr	$276,600.00
	To Retained Earnings		$276,600.00
	(Being income transferred to retained earnings)