Question

The stockholders' equity section of Porter Corporation's balance sheet as of December 31, 2018 is as follows:

8% Cumulative, Participative, Convertible Preferred Stocks, $75 par value: authorized, 500,000 shares; issued, 100,000 shares	$7,500,000
Common stock, $12 stated value; authorized, 4,000,000 shares; issued, 400,000 shares	4,800,000
Paid-in capital in excess of par value – preferred stocks	2,000,000
Paid-in capital in excess of stated value – common stocks	2,400,000
Retained Earnings	9,000,000

The following events occurred during 2018:

Jan. 5             35,000 shares of authorized and unissued common stock were issued for $18 per share.

Jan. 15             Declared a cash dividend of $2,500,000, payable February 20 to stockholders on record on February 5. No dividends have been declared since December 31, 2016.   

Feb. 10           12,000 shares of authorized and unissued common stock were issued for $15 per share.

    

March 1           A 30% stock dividend was declared on common stocks. Market value per share is currently $25.

    

March 20         The 30% stock dividend on common stocks declared on March 1 was issued. Market value per share is currently $22.

April 1             A 3:1 stock split was carried out on the common stocks. Market value on March 31 was $20 per share.

    

July 1              A 15% stock dividend was declared and issued on common stocks. Market value is currently $16 per share.

    

Aug. 10          20,000 shares of authorized and unissued preferred stocks were issued for $95 per share.

Sept. 15           Reacquired 17,000 shares of common stocks at $20 per share. The company uses the cost method.

Nov. 20            Reissued 8,000 shares of treasury stocks at $24 per share.

Dec. 1              9,000 preferred stocks were converted. Five common stocks were issued for each preferred stock converted.

Dec. 31            Net Income for the year was $2,330,000.

Instructions:

1. Prepare the required journal entries to record the above transactions.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Date	Account	Debit	Credit
Jan 5	Cash	$           630,000
	Common Stock		420,000
	Paid in capital in excess of state value-Common stock		210,000
	(To record issuance of common stock)
Jan 15	Retained Earning	$       2,500,000
	Cash		2,500,000
	(To record cash dividend declared)
Feb 10	Cash	$           180,000
	Common Stock		144,000
	Paid in capital in excess of state value-Common stock		36,000
	(To record issuance of common stock)
Mar 1	Retained Earning (134100*$25)	$       3,352,500
	Common stock dividend distributable (134100*$12)		$              1,609,200
	Paid in capital in excess of state value-Common stock		$              1,743,300
	(To record stock dividend declared)
Mar 20	Common stock dividend distributable	$       1,609,200
	Common Stock		$              1,609,200
	(To record issue of stock dividend)
Apr 1	No Entry for Split
Jul 1	Retained Earning (261495*$16)	$       4,183,920
	Common stock dividend distributable (261495*$12)		$              3,137,940
	Paid in capital in excess of state value-Common stock		$              1,045,980
	(To record stock dividend declared)
Jul 1	Common stock dividend distributable	$       3,137,940
	Common Stock		$              3,137,940
	(To record issue of stock dividend)
Aug 10	Cash (20,000*$95)	$       1,900,000
	Preferred stock (20,000*$75)		$              1,500,000
	Paid in capital in excess of state value-Preferred stock		400,000
	(To record issuance of preferred stock)
Sep 15	Treasury Stock	$           340,000
	Cash		$                 340,000
	(To record reacquisition)
Nov 20	Cash (8,000*$24)	$           192,000
	Treasury Stock (8,000*$20)		$                 160,000
	Paid in capital from treasury stock		$                   32,000
	(To record reissue of treasury stock)
Dec 1	Preferred Stock (9,000*$75)	$           675,000
	Common Stock (45,000*$12)		$                 540,000
	Paid in capital in excess of state value-Common stock		$                 135,000
	(To record conversion of preferred stock)