Question

Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows: Jan. 9 Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split there were 1,279,500 common shares outstanding Purchased 39,200 shares of the corporation's own common stock at 527, recording the stock at cost 28 Feb May 1 Jul 10 Sep Declared semiannual dividends of $0.90 on 75.000 shares of preferred stock and $0.15 on the common stock to stockholders of record on June 1, payable on July 10 Paid the cash dividends Sold 30,800 shares of treasury stock at $34, receiving cash. Declared semiannual dividends of $0.90 on the preferred stock and 50.15 on the common stock (before the stock dividend). In addition, a 3% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38 Paid the cash dividends and issued the certificates for the common stock dividend. Oct 1 Dec. 1

Answer 1

Answer Journal Entry Date Jan. 9 Debit Credit General Journal No Entry Required Feb. 28 $1,058,400 Treasury Stock (39,200 shares x $27) Cash (To record the purchase of treasury stock) $1,058,400 May. 1 $253,545 Cash Dividend [175,000 x $0.90) + (1,279,500 - 39,200) < $0.15) Cash Dividend Payable (To record the Dividend Payable) $253,545 July. 10 $253,545 Cash Dividend Payable Cash (To record the dividend payment) $253,545 Sept. 7 $1,047,200 Cash (30,800 × $34) Treasury Stock (30,800 x $27) Paid in Capital from Sale of Treasury Stock (30,800 x ($34 - $27)] (To record the sale of treasury stock) $831,600 $215,600 Oct. 1 $258,165 **39,200 - 30,800 = 8,400 shares Cash Dividend ((75,000 x $0.90) + (1,279,500 - 8,400) < $0.15] Cash Dividend Payable (To record the Dividend Payable) $258,165

$1,449,054 Stock Dividends [(1,279,500 - 8,400) x 3% x $38] Stock Dividends Distributable [(1,279,500 - 8,400) x 3% x $25] Paid in Capital in Excess of Par - Common Stock [(1,279,500 - 8,400) x 3% ($38 - $25)] (To record the Stock Dividends Distributable) $953,325 $495,729 Dec. 1 $258,165 Cash Dividend Payable Cash (To record the dividend payment) $258,165 $953,325 Stock Dividend Distributable Common Stock (To record the Stock Dividends Distributable) $953,325