Question

On January 1, 2020, Swifty Corporation had 79,000 shares of $1 par value common stock issued and outstanding. During the year, the following transactions occurred:

Mar. 1		Issued 91,000 shares of common stock for $603,000.
June 1		Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
June 30		Paid the $2.00 cash dividend.
Dec. 1		Purchased 9,000 shares of common stock for the treasury for $19 per share.
Dec. 15		Declared a cash dividend on outstanding shares of $2.50 per share to stockholders of record on December 31.

Net income for 2020 amounted to $978,000. Prepare journal entries to record the above transactions.

Answer 1

Answer
Date	Account titles and explanation	Debit	Credit
Mar-01	Cash	$         6,03,000
	Common stock		$         91,000
	Paid in capital in excess of par value		$      5,12,000
	( common stock issue )
Jun-01	Retained earnings	$         3,40,000
	Dividend payable		$      3,40,000
	( Cash dividend declared )
Jun-30	Dividend payable	$         3,40,000
	Cash		$      3,40,000
	( cash dividend Paid )
Dec-01	Treasury stock	$         1,71,000
	Cash		$      1,71,000
	( Treasury stock Purchased )
Dec-15	Retained earnings	$         4,02,500
	Dividend payable (79000+91000-9000)*2.5		$      4,02,500
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