Question

Learning Objectives 3, 4 P13-42A Journalizing dividends and treasury stock transactions and preparing the stockholders' equity section of the balance sheet Deerborn Manufacturing Co. completed the following transactions during 2018: Nov. 8 Treasury Stock $4,000 Jan. 16 Declared a cash dividend on the 6%, $103 par noncumulative preferred stock (1,050 shares outstanding). Declared a $0.20 per share dividend on the 100,000 shares of $2 par value common stock outstanding. The date of record is January 31, and the payment date is February 15. Feb. 15 Paid the cash dividends. Jun. 10 Split common stock 2-for-1. Jul. 30 Declared a 30% stock dividend on the common stock. The market value of the common stock was $9 per share. Aug. 15 Distributed the stock dividend. Oct. 26 Purchased 1,000 shares of treasury stock at $8 per share. Nov. 8 Sold 500 shares of treasury stock for $10 per share. 30 Sold 300 shares of treasury stock for $4 per share. Requirements 1. Record the transactions in Deerborn's general journal. 2. Prepare the Decrborn's stockholders' equity section of the balance sheet as of December 31, 2018. Assume that Deerborn was authorized to issue 2,600 shares of preferred stock and 400,000 shares of common stock. Both preferred stock and common stock were issued at par. The ending balance of retained earnings as of December 31, 2018, is $2,060,000.

Answer 1

1)

Date	Account Title	Debit	Credit
Jan. 16	Retained Earnings (1050 shares x $103 x 6%)	6,489.00
	Cash Dividends Payable - Preferred Stocks		6,489.00
Jan. 16	Retained Earnings(100,000 shares x $0.20)	20,000.00
	Cash Dividends Payable - Common Stocks		20,000.00
Feb. 15	Cash Dividends Payable - Preferred Stocks	6,489.00
	Cash Dividends Payable - Common Stocks	20,000.00
	Cash		26,489.00
Jun. 10	No entry
Jul. 30	Retained Earnings	120,000.00
	Common Stocks Distributable		120,000.00
	(200,000 shares x $2 x 30%)
Aug. 15	Common Stocks Distributable	120,000.00
	Common Stocks		120,000.00
Oct. 26	Treasury Stocks	8,000.00
	Cash (1,000 shares x $8)		8,000.00
Nov. 08	Cash (500 shares x $10)	5,000.00
	Treasury Stocks (500 shares x $8)		4,000.00
	APIC - Treasury Stocks (500 shares x ($10-$8))		1,000.00
Nov. 30	Cash(300 shares x $4)	1,200.00
	APIC - Treasury Stocks(300 shares x $4)	1,200.00
	Treasury Stocks (300 shares x $8)		2,400.00

2)

Common Stocks	320,000.00
(Authorized 400,000 shares; Issued 260,000 shares
Preferred Stocks	108,150.00
(Authorized 2,600 shares; Issued 1050 shares @ $103 Par
Treasury Stocks	-        1,600.00
(Acquired 1,000 shares @ $8 Par; Issued 800 shares
APIC - Treasury Stocks	-           200.00
Retained Earnings	1,913,511.00
Stockholders Equity	2,339,861.00