Question

Prepare journal entries for ABC Co.’s following events. 05/12/08 Received charter authorizing ABC Co. to issue 40,000 shares of common stock at a par value of $2 per share. 06/03/08 Issued 18,000 shares of stock, receiving $40,000.

06/04/08 Paid the law firm of Lo, Ball and Hyde for their services to help organize the company by sending them one thousand shares of stock.

11/15/08 Declared a cash dividend of $3 per share, payable on 01/15/09, to holders of record as of 12/15/08.

12/15/08 Make the appropriate entry. 12/31/08 Make any necessary adjusting entry.

01/15/09 Make the appropriate entry.

06/12/09 Declared a ten percent (10%) stock dividend, payable on 7/15/09 (ignore the date of record for this event).The market value of the stock is $20 per share.

07/15/09 Make the appropriate entry. 08/15/09 Declared a two-for-one stock split. The market value of the stock is $22 per share. 09/15/09 Declared and paid a cash dividend of $2 per share (pretend this happens all in one day).

10/01/09 Purchased 2,000 shares of treasury stock for a total price of $40,000.

10/15/09 Declared and paid a cash dividend of $2 per share.

11/15/09 Reissued 400 shares of treasury stock at $32 each.

12/15/09 Reissued the remaining treasury stock at $9 per share.

Answer 1

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
6/3/2008	Cash	40,000.00
	Common Stock		36,000.00	18,000 Shares X $2
	Paid in Capital in Excess of Par		4,000.00	$40,000 - $36,000
	(To record the issue of common stock)
6/4/2008	Organisation Expenses	2,222.00		($40,000 / 18,000 Sh.) X 1000 Sh.
	Common Stock		2,000.00	1,000 Shares X $2
	Paid in Capital in Excess of Par		222.00
	(To record the issue of common stock)
11/15/2008	Retained Earnings	57,000.00		19,000 Shares X $3
	Dividends Payable		57,000.00
	(to record the dividend payable)
12/15/2008	No entry
1/15/2009	No entry
1/15/2009	Dividends Payable	57,000.00
	Cash		57,000.00
	(To record the dividends paid)
6/12/2009	Retained Earnings	38,000.00		19,000 Shares X 10% X $20
	Stock Dividends Payable		3,800.00	1,900 Shares X $2
	Paid in Capital in Excess of Par		34,200.00	1,900 Shares X $18
	(to record the stock dividend declared)
7/15/2209	Stock Dividends Payable	3,800.00
	Common Stock		3,800.00
	(to record the sock dividend issued)
8/15/2009	No Entry
9/15/2009	Retained Earnings	83,600.00		41,800 Shares X $2
	Cash		83,600.00
	(to record the cash dividend declared & Paid)
10/1/2009	Treasury Stock	40,000.00
	Cash		40,000.00
	(To record the purchase of Treasury Stock)
10/15/2009	Retained Earnings	79,600.00		39,800 Shares X $2
	Cash		79,600.00
	(to record the cash dividend declared & Paid)
11/15/2009	Cash	12,800.00		400 Shares X $32
	Treasury Stock		8,000.00	400 Shares X $20
	Paid in Capital in Excess of Par - Treasury Stock		4,800.00	400 Shares X $12
	(To record the issue of Treasury stock)
12/15/2009	Cash	14,400.00		1,600 shares X $9
	Paid in Capital in Excess of Par - Treasury Stock	4,800.00
	Treasury Stock		19,200.00	1,600 Shares X $12
	(To record the issue of Treasury stock)