Q4) Prepare journal entries for ABC Co.’s following events. 05/12/08 Received ch
ID: 2471732 • Letter: Q
Question
Q4)
Prepare journal entries for ABC Co.’s following events.
05/12/08 Received charter authorizing ABC Co. to issue 40,000 shares of common stock at a par value of $2 per share.
06/03/08 Issued 18,000 shares of stock, receiving $40,000.
06/04/08 Paid the law firm of Lo, Ball and Hyde for their services to help organize the company by sending them one thousand shares of stock.
11/15/08 Declared a cash dividend of $3 per share, payable on 01/15/09, to holders of record as of 12/15/08.
12/15/08 Make the appropriate entry.
12/31/08 Make any necessary adjusting entry.
01/15/09 Make the appropriate entry.
06/12/09 Declared a ten percent (10%) stock dividend, payable on 7/15/09 (ignore the date of record for this event). The market value of the stock is $20 per share.
07/15/09 Make the appropriate entry.
08/15/09 Declared a two-for-one stock split. The market value of the stock is $22 per share.
09/15/09 Declared and paid a cash dividend of $2 per share (pretend this happens all in one day).
10/01/09 Purchased 2,000 shares of treasury stock for a total price of $40,000.
10/15/09 Declared and paid a cash dividend of $2 per share.
11/15/09 Reissued 400 shares of treasury stock at $32 each.
12/15/09 Reissued the remaining treasury stock at $9 per share.
Explanation / Answer
Date Account Head Debit Credit 05-12-08 No entry 06-03-08 Cash 40,000 Common stock 36,000 Paid in capistal in excess of par 4,000 06-04-08 Law firm of Lo, Ball and Hyde 2,000 Common stock 2,000 Issued 1000 share of common stock for services of Lw firm 11/15/08 Dividend declared or Retained Earnings 57,000 Dividends payable 57,000 12/015/08 Memorandam entry that the firm will pay a dividend to all stockholders of record as of today, the date of record. 12/31/08 No entry 01/15/09 Dividend payable 57,000 Cash 57,000 06-12-09 Retained Earnings 38,000 Common stock dividend distributable 3,800 Paid in Capital in excess of Par 34,200 07/15/09 Common stock dividend distributable 3,800 Common stock dividend distributable 3,800 08/15/09 The only journal entry needed for a stock split is a memo entry to note that the number of shares has changed and that the par value per share has changed (if the stock has a par value). However, a typical journal entry with debits and credits is not needed since the total dollar amounts for the par value and other components of paid-in capital and stockholders' equity do not change. 09/15/09 Dividend 83,600 Cash 83,600 10-01-09 Treasury stock 40,000 Cash 40,000 10/15/09 Dividend 83,600 Cash 83,600 11/15/09 Cash 12,800 Treasury stock 12,800 12/15/09 Cash 14,400 Treasury stock 14,400
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.