Common stock, par $20 1. Sold and issued 10 common shares at par. Disregard in s

Question

Common stock, par $20 1. Sold and issued 10 common shares at par. Disregard in subsequent transaction. 2. Sold and issued 5,000 shares common stock at $26 per share. 3. Issued a 10% stock dividend when the stock was selling at $30 per share. 4. Declared a cash dividend of $1 per share on the shares outstanding. 5. Paid the cash dividend of $1 per share declared earlier (see above). 6. Purchased 100 shares of treasury stock at $27 per share. 7. Issued a 2-for-1 stock split when the market price was $30 per share.

Explanation / Answer

1) Cash 200 common stock 200 (issued 10 common shares at par) 2) Cash 130,000 common stock 100,000 PIC in excess of pat value common 30,000 (issued 5000 common shares @26 per share) 3) Retain Earning 15,600 Common Stock 10,400 PIC in excess of pat value common 5,200 (issued stock dividend @10% - outstanding shares 5200) 4) Retain Earning 5,200 Dividend Payable 5,200 (declared $1 cash dividend per share) 5) Dividend Payable 5,200 Cash 5,200 (paid cash dividend) 6) treasure Stock 2700 cash 2700 7) no entry is made as there is not changes to ledger values.

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