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. | |||
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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