Question

Jan.	9	Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,051,500 common shares outstanding.
Feb.	28	Purchased 41,200 shares of the corporation’s own common stock at $27, recording the stock at cost.
May	1	Declared semiannual dividends of $0.90 on 71,600 shares of preferred stock and $0.13 on the common stock to stockholders of record on June 1, payable on July 10.
Jul.	10	Paid the cash dividends.
Sep.	7	Sold 28,500 shares of treasury stock at $34, receiving cash.
Oct.	1	Declared semiannual dividends of $0.90 on the preferred stock and $0.13 on the common stock (before the stock dividend). In addition, a 3% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38.
Dec.	1	Paid the cash dividends and issued the certificates for the common stock dividend.

Answer 1

Solution:

Jan. 9 No entry required

Feb. 28 Treasury stock................1,112,400

Cash.................................1,112,400

41,200 x $27 = $1,112,400

May 1 Cash.........................195,779

Cash dividend payable....................195,779

(71,600*$0.90 + 1,010,300*$0.13)

Jul 10 Cash dividend payable ................. 195,779

Cash.................................................... 195,779

Sep 7 Cash .............................969,000 (28,500 x $34)

Treasury stock ........................................................769,500 (28,500 x $34)

Paid in capital from sale of treasury stock .............. 199,500

Oct 1 Cash .................... 199,484

Cash dividend payable ..................... 199,484

71,600 x $0.90 + 1,038,800 x $0.13

Stock dividends .......................... 1,184,232

Stock dividends distributable ................................................. 779,100 (1,038,800 x $25 x 3%)

Paid in capital in excess of par common stock ......................405,132 (1,038,800 x $13 x 0.03)

Dec. 1

Cash dividend payable ...................199,484

Cash ..........................................199,484