Question

P12-38A Journalizing dividends and treasury stock transactions and preparing the stockholders' equity section of the balance sheet Winterborn Manufacturing Co. completed the following transactions during 2016: Jan. 16 Feb. 15 Jun. 10 Jul. 30 Declared a cash dividend on the 4%, $100 par noncumulative preferred stock (950 shares outstanding). Declared a $0.40 per share dividend on the 95,000 shares of $4 par value common stock outstanding. The date of record is January 31, and the payment date is February 15. Paid the cash dividends. Split common stock 2-for-1. Declared a 50% stock dividend on the common stock. The market value of the common stock was $10 per share. Distributed the stock dividend. Purchased 1,400 shares of treasury stock at $9 per share. Sold 700 shares of treasury stock for $11 per share. Sold 500 shares of treasury stock for $6 per share. Aug. 15 Oct 26 Nov. 8 30

Answer 1

Date	General Journal	Debit
Jan-16	Retained earnings	$ 3,800
	Cash Dividends payable-preferred stock
	( 950 shares * $ 100 * 4 % )
	( to record declared cash dividend on preferred stock)
	Retained earnings	$ 38,000
	Cash Dividends payable-Common stock
	(95,000 shares * $ 0.40 per share )
	( to record declared cash dividend on common stock)
Feb-15	Cash Dividends payable-preferred stock	$ 3,800
	Cash Dividends payable-Common stock	$ 38,000
	Cash
	( to record dividends paid )
Jun-10	NO journal entry
Jul-30	Retained earnings	$ 380,000
	Common stocks distributable
	( 190,000 shares* $ 4 * 50 % )
	( to record declared 50 % stock dividend on common stock )
Aug-15	Common stocks distributable	$ 380,000
	Common stocks
	( to record distributed the stock dividend ).
Oct-26	Treasury stocks	$ 12,600
	Cash ( 1,400 shares * $ 9 )
	( to record purchase of treasury stock 1400 shares @ 9 per share).
Nov-08	Cash    ( 700 shares * $ 11 )	$ 7,700
	Treasury stocks ( 700 shares * $ 9 )
	additional paid in capital - Treasury stocks ( 700 shares * ($11-$9)
	( to record sold 700 shares of treasury stocks @ 11 per share ).
Nov-30	Cash    ( 500 shares * $6 )	$ 3,000
	additional paid in capital - Treasury stocks ( 500 shares * $3 )	$ 1,500
	Treasury stocks ( 500 shares * $ 9 )
	( to record sold 500 shares of treasury stocks @ 6 per share ).
2)	Winterborn's stockholders equity section of balance sheet as of December 31,2016 :
	particular	Amount ($)
	Common stock s	$ 760,000
	( 95,000 shares*$ 4) + $ 380,000
	preferred stocks	$ 95,000
	( 950 shares * $ 100 )
	less: treasury stocks ( 200 shares * $ 9 )	( $ 1,800)
	( acquired 1,400 shares @ 9 par , issued 1200 shares)
	less: additional paid in capital - Treasury stocks ( $ 1,500 -$ 1,400 )	( $100 )
	add: retainded earnings	$ 1,658,200
	( $ 2,080,000 - ( $ 3,800+ $ 38,000 +380,000).
		$ 2,511,300