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a corporation issues 50,000 shares of $50 par common stock and holds 5,000 shares of these...

a corporation issues 50,000 shares of $50 par common stock and holds 5,000 shares of these shares as treasury stock. if the corporation declares a $3 per share cash dividend, what amount will be record as a cash dividend and (b) record the entry for the Issuance of the stocks and (c) the payment of the cash dividend.

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Answer #1

a.

Number of shares issued = 50,000

Number of treasury shares = 5,000

Number of outstanding shares = Number of shares issued - Number of treasury shares

= 50,000 - 5,000

= 45,000

Dividend per share = $3

Total cash dividend declared = Dividend per share x Number of outstanding shares

= 3 x 45,000

= $135,000

b.

Journal

Account Title and Explanation

Debit

Credit
Cash 2,500,000
Common stock 2,500,000

c.

Journal

Account Title and Explanation

Debit

Credit
Cash dividend 135,000
Cash 135,000
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