Question

Macondo, Inc. is a wholesaler located in Aguadilla. During its current fiscal year, ended December 31, 2019, Macondo Inc. completed the following selected transactions:

Feb. 3 Purchased 2,500 shares of its own common stock at $26, recording the stock at cost. (Prior to the purchase, there were 40,000 shares of $20 par common stock outstanding.

May 1 Declared a semiannual dividend of $1 on the 10,000 shares of preferred stock a $.30 dividend on the common stock to stockholders of record on May 31, payable on June 15.

June 15 Paid the cash dividends.

Sept. 23 Sold 1,000 shares of treasury stock at $28, receiving cash.

Nov. 1 Declared semiannual dividends of $1 on the preferred and $.30 declared on the common stock, In addition, a 5% common stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimate at $30.

Dec. 1 Paid the cash dividends and issued the certificates for the common stock dividend.

Instructions: Journalize the transactions.

Answer 1

Answer -

Journal of Macondo Inc.

Date	General journal	Debit ($)	Credit ($)
Feb. 3	Treasury Stock [2500 shares * $26] Cash	65000 -	- 65000
May 1	Cash Dividends [(10000 shares * $1) + (37500 shares * $0.30)] Cash Dividends Payable	21250 -	- 21250
June 15	Cash Dividends Payable Cash	21250 -	- 21250
Sept. 23	Cash [1000 shares * $28] Treasury Stock [1000 shares * $26] Paid-In Capital from Sale of Treasury Stock [Difference]	28000 - -	- 26000 2000
Nov. 1	Cash Dividends [(10000 shares * $1) + (38500 shares * $0.30)] Cash Dividends Payable	21550 -	- 21550
Nov. 1	Stock Dividends [(38500 shares * 5%) * $30] Stock Dividends Distributable [(38500 shares * 5%) * $20] Paid-In Capital in Excess of Par--Common Stock [Difference]	57750 - -	- 38500 19250
Dec. 1	Cash Dividends Payable Stock Dividends Distributable Cash Common Stock	21550 38500 - -	- - 21550 38500