Question

Halborn Manufacturing Co. completed the following transactions during 2018:

i More Info Jan. Feb. Jun. Jul. 16 Declared a cash dividend on the 5%, $99 par noncumulative preferred stock (1,100 shares outstanding). Declared a $0.30 per share dividend on the 90,000 shares of $4 par value common stock outstanding. The date of record is January 31, and the payment date is February 15. 15 Paid the cash dividends. 10 Split common stock 2-for-1. 30 Declared a 40% stock dividend on the common stock. The market value of the common stock was $12 per share. 15 Distributed the stock dividend. 26 Purchased 8,000 shares of treasury stock at $9 per share. 8 Sold 4,000 shares of treasury stock for $10 per share. 30 Sold 1,400 shares of treasury stock for $5 per share. Aug. Oct. Nov. Print Done

Answer 1

Date Account Titles and Explanation Debit Credit Jan-16 $ $ 5,445 27,000 Cash Dividends Common Stock Dividend Distributable Dividends Payable-Preferred Dividends Payable-Common (Being dividend payable entry made) $ 5,445 $ 27,000 $ 5,445 $ 27,000 Feb-15 Dividends Payable-Preferred Dividends Payable-Common Cash (Being dividend paid to shareholders) $ 32,445 Jun-10 No entry required $4,32,000 Jul-30 Retained Earnings Stock Dividend (Being stock dividend declared) $4,32,000 $4,32,000 Aug-15 Stock Dividend Common Stock Paid-In Capital in Excess of Par-Common (Being stock dividend distributed) $1,44,000 $2,88,000

$ 72,000 Oct-26 Treasury Stock-Common Cash (Being stock dividend declared) $ 72,000 $ 40,000 Nov-08 Cash Treasury Stock-Common Paid-In Capital from Treasury Stock Transactions (Being sale of treasury stock purchased) $ $ 36,000 4,000 Nov-30 Cash Paid-In Capital from Treasury Stock Transactions Retained Earnings Treasury Stock-Common (Being sale of treasury stock purchased) $ $ $ 7,000 4,000 1,600 $ 12,600

Workings: Jan-16 Cash Dividends = No of Preference Shares x par value per share x rate = 1,100 x $99 x 5% = $ 5,445 Common Stock Dividend Distributable = No of Common Stock x dividend per share = 90,000 x $0.30 = $ 27,000 Jul-30 Stock Dividend = No of Common Stock x 40% x market value per share = 90,000 x 40% x $ 12 = $4,32,000 Aug-15 Common Stock = No of Common Stock x 40% x par value per share = 90,000 x 40% x $ 4 = $1,44,000 Paid-In Capital in Excess of Par-Common (market value per share - par value per share) = No of Common Stock x 40% = 90,000 x 40% x ($12 - $4) = $2,88,000

Oct-26 Treasury Stock-Common = No of Common Stock purchased x purchase value per share = 8,000 x $9 = $ 72,000 Nov-08 Cash = No of Common Stock sold x sale value per share = 4,000 x $ 10 = $ 40,000 Treasury Stock-Common = No of Common Stock sold x purchase value per share = 4,000 x $9 = $ 36,000 Paid-In Capital from Treasury Stock Transactions = No of Common Stock sold x (sale value per share - purchase value per share) = 4,000 x ($10 - $9) = $ 4,000

Nov-30 Cash = No of Common Stock sold x sale value per share = 1,400 x $ 5 = $ 7,000 Treasury Stock-Common = No of Common Stock sold x purchase value per share = 1,400 x $ 9 = $ 12,600 Retained Earnings = [No of Common Stock sold x (purchase value per share - sale value per share)] -Paid-In Capital from Treasury Stock Transactions = $5,600 - $4,000 = $ 1,600

Halborn Manufacturing, Co. Balance Sheet (Partial) December 31, 2018 Stockholders' Equity Paid-In Capital Preferred Stock, $ 99 par, 2,400 autorized, 1,100 shares issued and outstanding $ 1,08,900 Common Stock, $4 par, 300,000 autorized, 126,000 shares issued, 123,400 shares outs $ 5,04,000 Paid-In Capital in Excess of Par-Common $ 2,88,000 Total Paid-In Capital $ 9,00,900 Add: Retained Earnings $ 10,90,000 Less: Treasury Stock-Common ( 2,600 shares at $ 9 each) $ -23,400 Total Stockholders' Equity $ 20,14,300