Selected transactions completed by Big Water Boating Corporation during the curr

Question

Selected transactions completed by Big Water Boating Corporation during the current fiscal year are as follows:
Jan. 3. Split the common stock 3 for 1 and reduced the par from $90 to $30 per share. After the split, there were 750,000 common shares outstanding.
Apr. 7. Purchased 50,000 shares of the corporation%u2019s own common stock at $33, recording the stock at cost.
May 1. Declared semiannual dividends of $1.40 on 35,000 shares of preferred stock and $0.09 on the common stock to stockholders of record on May 15, payable on June 1.
June 1. Paid the cash dividends.
July 29. Sold 36,000 shares of treasury stock at $40. receiving cash.
Nov. 15. Declared semiannual dividends of $1.40, on the preferred stock and $0.15 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $41.
Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend.
Instructions:
Journalize the transactions

Explanation / Answer

Feb. 10. Split the common stock 3 for 1 and reduced the par from $60 to $20 per share. After the split, there were 300,000 common shares outstanding.
Stock splits need no journal entries.

May 1. Declared semiannual dividends of $2.00 on 40,000 shares of preferred stock and $0.12 on the common stock payable on June 15.
Dr Retained Earnings 116,000
Cr Cash Dividends Payable 116,000

June 15. Paid the cash dividends
Dr Cash Dividends Payable 116,000
Cr Cash 116,000

Nov. 1. Declared semiannual dividends of $2.00 on the preferred stock and $0.08 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $28.
Dr Retained Earnings 104,000
Cr Cash Dividends 104,000

Dr Retained Earnings 168,000 (300,000 x 28 x 2%)
Cr Stock Dividends Distributable 120,000 (300,000 x 20 x 2%)
Cr Paid-In Capital in Excess of Par, Common Stock 48,000

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