Comprehensive Problem 4 Part 1: Selected transactions completed by Equinox Produ

Question

Comprehensive Problem 4
  Part 1:

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 2014, were as follows:

1.  Journalize the selected transactions.

If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. For a compound transaction, if an amount box does not require an entry, leave it blank.

c.  Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.

d.  Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.

Explanation / Answer

c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.

Description Debit Credit

Cash Dr $520,000

Bond Payable Cr 500,000

Premium on Bond Payable Cr 20,000

(Total Cash = 500000*1.04 = $520,000)

d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.

Description Debit Credit

Retained earning Dr $50,000

Dividend payable Cr 50,000

Common stock (100,000*0.50 = $50,000)

Retained earning Dr $20,000

Pref Dividend payable Cr 20,000

Pref stock (20,000*1 = $20,000)

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