Question

Entries for Selected Corporate Transactions Selected transactions completed by Primo Discount Corporation during the current fiscal...

Entries for Selected Corporate Transactions

Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows.

Instructions:

Journalize the transactions. If no entry is required, select "No entry required" from the dropdown box and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

Jan. 15. Split the common stock 5 for 1 and reduced the par from $75 to $15 per share. After the split, there were 600,000 common shares outstanding.

Date Account Debit Credit
Jan. 9. No entry required
No entry required

Feb. 28. Purchased 48,000 shares of the corporation's own common stock at $20, recording the stock at cost.

Date Account Debit Credit
Feb. 28.

May 1. Declared semiannual dividends of $2.80 on 50,000 shares of preferred stock and $0.1 on the common stock to stockholders of record on June 1, payable on July 10.

Date Account Debit Credit
May 1.

July 10. Paid the cash dividends.

Date Account Debit Credit
July 10.

Sept. 7. Sold 35,000 shares of treasury stock at $25, receiving cash.

Date Account Debit Credit
Sept. 7.

Oct. 1. Declared semiannual dividends of $2.80 on the preferred stock and $0.16 on the common stock (before the stock dividend).

Date Account Debit Credit
Oct. 1.

Oct. 1. A 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $27.

Date Account Debit Credit
Oct. 1.

Dec. 1. Paid the cash dividends.

Date Account Debit Credit
Dec. 1.

Dec. 1. Issued the certificates for the common stock dividend.

Date Account Debit Credit
Dec. 1.
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Answer #1

Journal entries:

Date Account title and explanation Debit Credit
Jan.9 No entry required
Feb.28 Treasury stock [48,000 x $20] $960,000
Cash $960,000
[Purchase of own common stock]
May 1 Dividends $195,200
Dividends payable-preferred [50,000 x $2.80] $140,000
Dividends payable-common [(600,000-48,000 Treasury) x $0.1] $55,200
[Declaration of cash dividends]
July 10 Dividends payable-preferred $140,000
Dividends payable-common $55,200
Cash $195,200
[Payment of cash dividends]
Sept.7 Cash [35,000 x $25] $875,000
Treasury stock [35,000 x $20] $700,000
Paid-in capital in excess from treasury stock $175,000
[Sale of treasury stock]
Oct.1 Dividends $198,700
Dividends payable-preferred [50,000 x $2.80] $140,000
Dividends payable-common [587,000* x $0.1] $58,700
[Declaration of cash dividends]
Oct.1 Retained earnings [11,740 x $27] $316,980
Common stock dividend distributable $316,980
[Declaration of stock dividends]
Dec.1 Dividends payable-preferred $140,000
Dividends payable-common $58,700
Cash $198,700
[Payment of cash dividends]
Dec.1 Common stock dividend distributable $316,980
Common stock [11,740 x $15] $176,100
Paid-in capital in excess of par $140,880
[Payment of stock dividends]

Calculations:

Outstanding common shares
Jan.15 600,000
Feb.28 Treasury stock -48,000
Sept.7 Sale of treasury stock 35,000
   Balance before stock dividends 587,000*
Stock dividend [587,000 x 2%] 11,740
   Balance after stock dividends 598,740
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