E11-13 . On January 1, Guillen Corporation had 95,000 shares of no-par common st

Question

E11-13. On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr. 1               Issued 25,000 additional shares of common stock for $17 per share.

June 15           Declared a cash dividend of $1 per share to stockholders of record on June 30.

July 10                         Paid the $1 cash dividend.

Dec. 1              Issued 2,000 additional shares of common stock for $19 per share.

        15           Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of record on December 31.

Instructions

Prepare the entries, if any, on each of the three dividend dates.

How are dividends and dividends payable reported in the nancial statements prepared at December 31?

Explanation / Answer

Solution:

Journal entries to be recorded on December31 in the books of Guillen corporation:

Date Account Titles Debit Credit Apr 1 Cash(25000*$17) 425,000         Common Stock(25,000shares * $5) 125,000         Paid in capital in excess of Stated Value 300,000 June 15 Retained Earnings (120,000 * $1) 120,000           Dividends Payable 120,000 (As on June30 common stock outstanding is 95,000 + 25,000 shares) July10 Dividends payable 120,000             Cash 120,000 Dec1 Cash (2000shares * $19) 38,000       Common Stock (2000shares * $5) 10,000       Paid-in capital in excess of common stock 28,000 Dec15 Retained Earnings (122,000 shares * $1.2) 146,400       Dividend Payable 146,400

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