Question

Instructions Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows: Split the common stock 2 for 1 and reduced the par from S80 to $40 per share. After the split, there were 150,000 common shares outstanding. Declared semiannual dividends of $0.75 on 18,000 shares of preferred stock and $0.28 on the common stock payable on July 1 Jan. 8 Apr 30 Jul. 1 Paid the cash dividends Oct. 31 Declared semiannual dividends of S0.75 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $52. Paid the cash dividends and issued the certificates for the common stock dividend. Dec. 31 Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

There should be 13 Journal entries

Answer 1

1) on Jan 8

common stock of 80 at par(75000*80)              Dr   6000000

      To common stock of 40 at par(150000*40)         cr     6000000

2)April 30

Profit and loss a/c(0.75*18000)      Dr          $ 13500

       To dividend payable on preferred stock   Cr $ 13500

Profit and loss a/c(0.28*150000)      Dr                   $ 42000

         To dividend payable on common stock   Cr $ 42000

2) On Jul 1

dividend payable on preferred stock   Dr $ 13500

        To Cash     Cr                                       $13500

dividend payable on common stock    $ 42000

        To Cash     Cr                                 $ 42000

On Oct 31

Profit and loss a/c(0.75*18000)      Dr     $13500

               To dividend payable on preferred stock   Cr $ 13500

Profit and loss a/c(0.14*150000)      Dr     $ 21000

                To dividend payable on common stock   Cr $ 21000

Profit and loss a/c(5% on 150000*40)      Dr     $ 300000

    To add 5 % dividend payable on common stock   Cr     $ 300000

On Dec 31

dividend payable on preferred stock   Dr $ 13500

       To Cash       Cr                                      $ 13500

dividend payable on common stock   Dr $ 21000

          To Cash       Cr                                      $ 21000

add 5 % dividend payable on common stock   Dr     $ 300000

             To Cash       Cr                                            $ 300000