Question

Clearbom Manufacturing Co. completed the following transactions during 2018: i (Click the icon to view the transactions.) Read the requirements Requirement 1. Record the transactions in Clearborn's general Journal (Record debits first, then credits. Select the explanation on the last line of the journal entry table. I no entry is required, select "No entry required on the first line of the Accounts and Explanation column and leave the remaining cells blank) Jan 16: Declared a cash dividend on the 4%, $100 par noncumulative preferred stock (950 shares outstanding). Declared a $0.20 per share dividend on the 85,000 shares of S4 par value common stock outstanding. The date of record is January 31, and the payment date is February 15. Date Accounts and Explanation Debit Credit Jan. 16

Answer 1

1)

Date	Account title	Debit	credit
Jan 16	Cash Dividend -preferred stock (950*100*4%)	3800
	Cash Dividend-common stock (85000*.20)	17000
	Cash dividend payable		20800
Feb 15	Cash dividend payable	20800
	cash		20800
Jun 10	No entry required . [Only effect is that number of shares increased to 85000*2/1 = 170000 and par value per share reduced to 4*1/2 =$ 2 per share]
Jul 30	Stock Dividend	102000
	common stock dividend distribution		102000
Aug 15	common stock dividend distribution	102000
	Common stock		102000
Oct 26	Treasury stock (1600*10)	16000
	cash		16000
Nov 8	Cash (800*12)	9600
	Paid in capital in excess of cost -treasury stock		1600
	Treasury stock (800*10)		8000
Nov30	Cash (700*7)	4900
	Paid in capital in excess of cost -treasury stock	1600
	Retained earning	500
	Treasury stock (700*10)		7000

Working :

Jul 30:Number of shares issued as stock dividend =170000*30% 51000 shares

Value of stock dividend = 51000*2 = 102000

In case of large stock dividend (% is greater than 25% )than stock divided is debited with par value of shares.

Nov 30:In case treasury stocks are reissued at less than cost than first paid in capital from treasury stock is used first and if any difference exists then debited to retained earning.

2)

CLEARBORN'S STOCKHOLDERS EQUITY AS ON DECEMBER 31 2018
Paid in capital
4%,$100 par Non cumulative Preferred stock 950 shares issued and outstanding	95000
500000 shares of Common stock authorized ,221000 shares issued at a par value of $ 2	442000
Total paid in capital	537000
Retained earning	2050000
Total Paid in capital and retained earning	2587000
Less:Treasury stock (100*10)	-1000
Total stockholders equity	2586000