Question

Carp Corporation is authorized to issue 2,000,000 shares of $1 par value common stock. During 2018, the company has the stock transactions listed below. Journalize the transactions for Carp Corporation in spaces provided below.

Jan.   15     Issued 700,000 shares of stock at $7 per share.

Sept.   5     Purchased 20,000 shares of common stock for the treasury at $8 per share.

Dec.    6     Declared a $0.50 per share dividend to the remaining stockholders of record on December 20, payable January 3, 2019.

Dec. 12     Assuming that there are 680,000 shares outstanding, a par value per share of $1 and a current price per share of $7, Carp Corporation declares and pays a Common stock dividend of 10% on December 12

Solution Problem 2      

Jan.   15     Cash ......................................................................................                  

                           Common Stock.............................................................                                          

                           Paid-in Capital in Excess of Par Value—Common Stock                                       

                          

Sept.   5     Treasury Stock......................................................................                  

                           Cash..............................................................................                                          

Dec.    6     Cash Dividends......................................................................                  

                           Dividends Payable........................................................                                          

                             

Dec. 12     Retained Earnings   ..............................................................                  

                        Common Stock at Par.....................................................                  

                        Common Stock PICIX.....................................................                  

Answer 1

Carp Corporation
Journal
Date	Particulars	LF	Debit	Credit		Calculation
Jan-15	Cash Account	Dr		4,900,000			700,000*7
	To	Common Stock				700,000		700,000*1
	To	Paid-in Capital in Excess of Par Value - Common Stock			4,200,000		Balance
Sep-05	Treasury Stock	Dr		160,000			20,000*8
	To	Cash Account				160,000
Dec-06	Retained Earnings	Dr		374,000			748,000*1*0.50
	To	Cash Dividend Payable				374,000		Also See WN1
Dec-12	Retained Earnings	Dr		476,000			680,000*7*10%
	To	Common Stock				68,000		680,000*1*10%
	To	Paid-in Capital in Excess of Par Value - Common Stock			408,000		680,000*6*10%

WN 1: Shares outstanding as on Dec 20
Jan-15	Issued	700,000
Sep-05	Bought back	(20,000)
		680,000
Dec-12	Stock dividend @ 10%	68,000
	Shares outstanding as on Dec 20	748,000