Instructions
Selected transactions completed by ATV Discount Corporation during the current fiscal year are as follows:
Jan. | 5. | Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,279,500 common shares outstanding. |
Mar. | 10. | Purchased 39,200 shares of the corporation’s own common stock at $27, recording the stock at cost. |
Apr. | 30. | Declared semiannual dividends of $0.90 on 75,000 shares of preferred stock and $0.15 on the common stock to stockholders of record on May 15, payable on June 15. |
June | 15. | Paid the cash dividends. |
Aug. | 20. | Sold 30,800 shares of treasury stock at $34, receiving cash. |
Oct. | 15 | Declared semiannual dividends of $0.90 on the preferred stock and $0.15 on the common stock (before the stock dividend). In addition, a 3% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38. The dividend date of record is November 15 payable on December 19. |
Dec. | 19. | Paid the cash dividends and issued the certificates for the common stock dividend. |
Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.
Solution:
Journal Entries - ATV Discount Corporation | |||
Date | Particulars | Debit | Credit |
5-Jan | No Entry Required | ||
10-Mar | Treasury stock Dr (39200*$27) | $1,058,400.00 | |
To Cash | $1,058,400.00 | ||
(To record purchase of own stock) | |||
30-Apr | Cash Dividends Dr [(75000*$0.90) + (1279500-39200)*$0.15] | $253,545.00 | |
To Cash Dividend Payable | $253,545.00 | ||
(To record dividend declared) | |||
15-Jun | Cash Dividend Payable Dr | $253,545.00 | |
To Cash | $253,545.00 | ||
(To record payment of dividends) | |||
20-Aug | Cash Dr (30800*$34) | $1,047,200.00 | |
To Treasury stock (30800*$27) | $831,600.00 | ||
To Paid in capital from sale of treasury stock | $215,600.00 | ||
(To record reissue of treasury stock) | |||
15-Oct | Cash Dividends Dr [(75000*$0.90) + (1279500-8400)*$0.15] | $258,165.00 | |
To Cash Dividend Payable | $258,165.00 | ||
(To record dividend declared) | |||
15-Oct | Stock dividends Dr [(1279500 - 8400)*3%*$38] | $1,449,054.00 | |
To Stock dividend distributable | $953,325.00 | ||
To Paid in capital in excess of par - common stock | $495,729.00 | ||
(To record stock dividend declared) | |||
19-Dec | Cash Dividend Payable Dr | $258,165.00 | |
To Cash | $258,165.00 | ||
(To record payment of dividends) | |||
19-Dec | Stock dividend distributable Dr | $953,325.00 | |
To Common stock | $953,325.00 | ||
(To record stock dividend distributed) |
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