Exercise 11-5 On January 1, 2018, Pearl City Corporation had 78,000 common share

Question

Exercise 11-5 On January 1, 2018, Pearl City Corporation had 78,000 common shares, recorded at $580,000, and retained earnings of $985,000. During the year, the following transactions occurred Apr. 2 Issued 4,600 common shares at $20 per share June 15 Declared a cash dividend of $0.35 per share to common shareholders of record on June 30, payable on July 10 Aug. 21 Declared a 5% stock dividend to common shareholders of record on September 5 distributable on September 20. he shares en trading or A a share on August 2 ·sa o September nd on September 20 Nov. ssed 3,000 common shares at $24 per share Dec. 20 Declared a cash dividend of 0.40 per share to cormmon shareholders of record on December 31, payable on January 10.

Explanation / Answer

Date Account titles and Explanation Debit Credit 2-Apr Cash 92000 common stock 92,000 (4600*20) 15-Jun Cash dividend 28910 Dividends payable 28,910 (82,600*.35) 10-Jul Dividends payable 28,910 cash 28,910 21-Aug Stock Dividend (4130*21) 86730 Common stock divdiend distributable 86,730 20-Sep Common stock dividend distributable 86730 common stock. 86730 1-Nov Cash 72000 common stock (3000*24) 72,000 20-Dec Cash dividend 35892 dividends payable 35,892 (89,730*.40) Number of common shares 89,730 Number of shares !/1/2018 balance 78,000 4/2/2018 issued 4,600 82,600 21-Aug Stock dividend 4130 1-Nov issued 3,000 89,730

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