Eureka enterprise inc. manufactures bathroom fixtures.. The stockholders equity

Question

Eureka enterprise inc. manufactures bathroom fixtures.. The stockholders equity accounts of Eureka Enterprise inc., with balances on january 1, 2008, areasfollows;
Common Stock, $10 stated value (500,000 shares authorized, 380,000 shares issued)....3,800,000
Paid in capital in excess stated value....760,000
Retained earnings.... 4,390,000
Treasury Stock (500,000 shares at cost)

The following selected transactions occured during the year.
Jan. 6. Paid cash dividends of $0.20 per share on commonstock.the dividend had been properly recorded when declared on dec.30 ofthe preceding fiscal year for $71,000.
May. 21 Sold all of the treasury stock for 460,000
July 1. Declared a 3% stock dividend on common stock,tobe capitalized at the market price of the stock, which is 30$ per share.
Aug. 15. Issued the certificates for the dividend declared onJuly 1.
sept. 30. purchased 10,000 shares of treasury stock for $230,000.
Dec. 27 declared a $0.25 per share dividend on common stock
31. Closedthecredit balance of the income summary account 639,500
31. Closedthetwo dividends accounts to retained earnings.
Instructions:

2. journalize the entries to record the transactions

Explanation / Answer

Jan. 6. Paid cash dividends of $0.20 per share on common stock.the dividend had been properly recorded when declared on dec.30 ofthe preceding fiscal year for $71,000. Dividend Payable Dr 71,000 Cash Cr 71,000 May. 21 Sold all of the treasury stock for 460,000 Cash (50,000 shares) Dr 460,000 Paid-in Capital from Treasury Stock Dr 40,000 Treasury Stock (50,000 at $10 cost) Cr 500,000 July 1. Declared a 3% stock dividend on common stock,to be capitalized at the market price of the stock, which is 30$ per share. Retained Earnings (Stock Dividend Declared) Dr 342,000 (3% * 380,000 outstanding shares =11,400 shares * $30 fmv) Common stock Dividend Payable (11,400 * $10) Cr 114,000 Paid-in Capital in Excess of Stated Value Cr 228,000 Aug. 15. Issued the certificates for the dividend declared onJuly 1. Common stock Dividend Payable Dr 114,000 Common stock Cr 114,000 Sept. 30. purchased 10,000 shares of treasury stock for $230,000. Treasury Stock (10,000 * $10) Dr 100,000 Retained Earnings ($13 *10,000) Dr 130,000 (Dr) ***Being $13 the difference between the $23 paid for T/S and the $10 stated value*** Cash (10,000 * $23) Cr 230,000 Dec. 27 declared a $0.25 per share dividend on common stock Retained Earnings Dr 95,000 *** 380,000 shares *$0.25 = $95,000*** Common Stock Dividend Payable Cr 95,000 Dec31. Closed the credit balance of the income summary account 639,500 Income Summary Dr 639,500 Retained Earnings Cr 639,500 Dec 31. Closed the two dividends accounts to retained earnings. Retained Earnings Dr 71,000 Dividends Payable Cr 71,000 **** Jan 06**** Retained Earnings Dr 95,000 Dividends Payable Dr 95,000 **** Dec 27 *****

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