Question

The stockholders' equity section of Jun Company's balance sheet as of April 1 follows. On Aprl 2, Jun declares and distributes a 10 % stock dividend. The stock's per share market value on April 2 Is $10 (prior to the dividend). Common stock-$5 par value, 495,eee shares authorized, 260,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $ 1,300,e00 610,000 893,000 Total stockholders equity $ 2,803,000 Prepare the stockholders' equity section Immediately after the stock dividend. JUN COMPANY Stockholders Equity April 2 (after stock dividend) Total paid-in capital Total stockholders equity

Answer 1

Answer:

Jun Company
Stockholders Equity
April 2 (after stock dividend)
Common stock 1300000+(26000*5)	1,430,000
paid in capital excess of par value- Common stock 610,000+(26000*(10-5))	740,000
Total paid in capital	2,170,000
retained earning 893000-26000*10	633,000
Total Stock holder's Equity	2,803,000

1.)

Transaction	General Journal	Debit ($)	Credit ($)
	Cash	$632,400
	Preferred Stock		$620,000
	Paid-in-capital		$12,400
	(Issue preferred stock for cash)

Working Notes:

Stock amount = Number of shares x $100
= 6200 shares x $100
= $620,000
Paid in capital amount = (Number of shares x Issuance value) - Stock amount
=(6200 shares x $102) - $620000
=$632,400-$620,000
=$12,400

2.)

Cumulative Preferred Dividend = Number of shares x Par value x Dividend%
=6200 shares x 100 x 6%
=$37,200

Thus Company JUN has declared dividend to be paid to its shareholders of preferred stock of $37,200