Question

Jan1: issued 10,000 shares of $2 per value for equipment worth $80,000. Assume there are 50,000 shares of stock outstanding after this transaction)

May 1. Declared and issued a 10% stock dividend when market price was $10 per share.

June 1. Required 4,000 shares at $12 per share.

Dec 1. Declared at $ 3 per share cash dividend.

Dec 15. Paid the dividend.

Answer 1

Journal entries

date	account and explanation	debit	credit
Jan 1	Equipment	80000
	Common Stock (10000*2)		20000
	paid in capital in excess of par value-Common Stock		60000
	(To record common Stock)
May 1	Retained earnings (50000*10%*10)	50000
	Common Stock dividend distributable		10000
	Paid in capital in excess of par value-common Stock		40000
	(To record stock dividend declared)
	Common Stock dividend distributable	10000
	Common Stock		10000
	(To record stock dividend declared)
June 1	Treasury Stock (4000*12)	48000
	cash		48000
	(To record treasury stock)
Dec 1	Cash dividend (51000*3)	153000
	Dividend payable		153000
	(To record dividend declared)
Dec 15	Dividend payable	153000
	cash		153000
	(To record dividend paid)