Question

The stockholders’ equity accounts of Riverbed Corp on January 1, 2022, were as follows.

merce Online Store Cableguys | Audio Plugins Essay Writing Service at $7/pag. Homepage - Georgia State Ch 11: Homework Show Attempt History Current Attempt in Progress The stockholders' equity accounts of Riverbed Corp on January 1, 2022, were as follows. Preferred Stock (7%, $100 par noncumulative, 15,000 shares authorized) $900,000 Common Stock ($4 stated value, 900,000 shares authorized) 3,000,000 Paid-in Capital in Excess of Par Value-Preferred Stock 45,000 Paid-in Capital in Excess of Stated Value-Common Stock 1,440,000 Retained Earnings 2,064,000 Treasury Stock (15,000 common shares) 120,000 During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity. Feb. 1 Issued 15,000 shares of common stock for $90,000. Mar. 20 Purchased 3,000 additional shares of common treasury stock at $7 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a $0.50 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022. Dec. 31 Determined that net income for the year was $840,000. Paid the dividend declared on December 1.

Answer 1

Solution:

(a) Journal Entries in the books of Riverbed Corp.

Date	Account Titles and Explanation	Debit	Credit
Feb.1	Cash	$      90,000
	Common stock ( 15000*4)		$        60,000
	Paid-In-Capital in Excess of Par Common Stock		$        30,000
	(Being Common Stock Issued)
Mar.20	Treasury Stock (3000*7)	$      21,000
	Cash		$        21,000
	(Being Treasury Stock purchased)
Oct.1	Cash Dividend (900000*7%)	$      63,000
	Dividend Payable		$        63,000
	( Being dividend declared)
Nov.1	Dividend Payable	$      63,000
	Cash		$        63,000
	(Being dividend paid)
Dec.1	Cash Dividend (753000*0.5)	$    376,500
	Dividend Payable		$     376,500
	( Being dividend declared)
Dec.31	Dividend Payable	$    376,500
	Cash		$     376,500
	(Being dividend paid)
Dec.31	Income Summary	$    840,000
	Retained Earnings		$     840,000
	( Being Income Summary closed)
Dec.31	Retained Earnings	$    439,500
	Cash Dividend ($ 376,500 + $ 63,000)		$     439,500
	( Dividend account closed)

Note;

1) Common stock dividend is paid on every share outstanding on record on December 15th, $ 0.50 per share on outstanding common stock of 750000 shares ( $ 3,000,000 / $4 ) + 3000 Shares ( New Issue)

= 753000 shares * $0.50 = $ 376,500