Question

Record the declaration of a cash dividend on its common stock of $1.50 per share and a $550,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.) Note: Enter debits before credits. Date General Journal Debit Credit November 01, 2021 Dividends Dividends Payable
National League Gear has two classes of stock authorized: 5%, $20 par preferred, and $5 par value common. The following transactions affect stockholders’ equity during 2021, National League’s first year of operations:

February	2		Issue 1.5 million shares of common stock for $30 per share.
February	4		Issue 550,000 shares of preferred stock for $24 per share.
June	15		Purchase 150,000 shares of its own common stock for $25 per share.
August	15		Resell 112,500 shares of treasury stock for $40 per share.
November	1		Declare a cash dividend on its common stock of $1.50 per share and a $550,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on November 15. (Hint: Dividends are not paid on treasury stock.)
November	30		Pay the dividends declared on November 1.

Answer 1

Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. Feb.2 $ 45,000,000.00 Cash (1,500,000 x $30) Common Stock (1,500,000x$5) Paid In Capital In Excess of Par - Common Stock (To record issue of Common Stock) $ 7,500,000.00 $ 37,500,000.00 Feb.4 $ 13,200,000.00 Cash (550,000x$24) Preferred Stock (550,000x$20) Paid In Capital In Excess of Par - Preferred Stock (To record issue of Preferred Stock) $ 11,000,000.00 $ 2,200,000.00 Jun.15 $ 3,750,000.00 Treasury Stock (150,000 x $25) Cash (To record purchase of treasury stock) $ 3,750,000.00

Aug.15 $ 4,500,000.00 Cash (112,500 x $40) Treasury Stock (112,500 x $25) Additional Paid In Capital - Treasury Stock (To record Sale of Treasury Stock) $ $ 2,812,500.00 1,687,500.00 Nov.1 $ 2,743,750.00 Retained Earnings (1,500,000- 150,000+112,500)x$1.50)+$550,000 Dividends Payable - Common Stock Dividends Payable - Preferred Stock (To record Dividends Declared) $ $ 2,193,750.00 550,000.00 $ $ 2,193,750.00 550,000.00 Nov.30 Dividends Payable - Common Stock Dividends Payable - Preferred Stock Cash (To record Payment of Dividends) $ 2,743,750.00