Question

Dearborn Manufacturing Co, completed the following transactions during 2018: (Click the icon to view the transactions) Read the requirements 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, Accounts and explanation Credit Date Jan 16 Retained Eamings Dividends PayablePreferred Dividends Payable Common Choose from any list or enter any number in the input fields and then click Check Answer. o remaining 8 parts Check Answer

Answer 1

Solution:

Date Jan. 16 Credit Debit $ 26,489 Account Titles and Explanation Retained Earnings Dividends payable-Preferred stock ($103*6%*1,050) Dividends payable-Common stock (100,000*$0.20) (To record declaration of cash dividends) $ $ 6,489 20,000 $ $ 6,489 20,000 Feb. 15 Dividends payable-Preferred stock Dividends payable-Common stock Cash (To record payment of cash dividends) $ 26,489 Jun. 10 No entry required (A declaration is needed that no. of shares are now increased to 200,000 and par value reduced to $1 ) Jul. 30 $ 540,000 Retained Earnings Stock dividends payable (200,000*0.30*$1) Paid-In Capital in Excess of par (200,000*$30*{$9-$1}) (To record declaration of stock dividend) $ $ 60,000 480,000 Aug. 15 $ 60,000 Stock dividends payable Common stock (To record distribution of stock dividend) $ 60,000 Oct.26 $ 8,000 Treasury stock (1,000*$8) Cash (To record purchase of treasury stock) $ 8,000 Nov. 8 $ 5,000 Cash (500*$10) Treasury stock (500*$8) Paid-in Capital-Treasury stock (To record sale of treasury stock) $ $ 4,000 1,000 Nov. 30 Cash (300*$4) Paid-in Capital-Treasury stock Retained Earnings Treasury stock (To record sale of treasury stock) $ $ $ 1,200 1,000 200 $ 2,400

Note: If the accounts: 'Cash dividends' and 'Stock dividends' are provided in the your list then use them instead of Retained earnings in the June 16 and July 30th journal entries respectively.

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