Jornalize the following entries 05/12/08 Received charter authorizing ABC Co. to
ID: 2486307 • Letter: J
Question
Jornalize the following entries
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 $9 per share.
Explanation / Answer
Date Account title & Explanation Debit($) Credit($) 2008 Jun-03 Cash 40000 Common stock 36000 Paid in capital in excess of par-common stock 4000 (Issued common stock. Paid in capital in excess of par = $40000 - 18000*$2 = $4000) Jun-04 organisation expense 2000 Common stock 2000 (paid the organisation expense issuing 1000 shares @$2 per share) Nov-15 Retained earnings 57000 Cash Dividend payable 57000 (dividend declared on 19000 outstanding shares @ $3 per share)) Dec-15 No entry Dec-31 Retained earnings 2000 Organisation expense 2000 (organisation expense is closed to retained earnings) 2009 Jan-15 Cash Dividend payable 57000 Cash 57000 (Cash dividend paid) Jun-12 Retained earnings (19000*10%*20) 38000 Paid in capital in eacess of par - common stock 34200 (19000*10%*18) Stock dividend distributable 3800 (19000*10%*2) (stock dividend declared) Jul-15 Stock dividend distributable 3800 Common stock 3800 (stock dividend distributed) Aug-15 No entry for stock split. Stockholders' equity remains same only the number of shares increases to 20900x2 = 41800 with a par value of $1 per share) Sep-15 Retained earnings 83600 (41800*$2) Cash dividend payable 83600 (cash dividend declared) Cash dividend payable 83600 Cash 83600 (dividend declared now paid) Oct-01 Treasury Stock(at cost) 40000 Cash 40000 (purchased treasury stock ) Oct-15 Retained earnings 79600 (41800-2000)*$2 Cash dividend payable 79600 (cash dividend declared) Cash dividend payable 79600 Cash 79600 (dividend declared now paid) Nov-15 Cash 12800 Treasury stock (at cost) 8000 (400*$20) Paid in capital in excess-treasury stock 4800 (reissue of treasury stock) Dec-15 Cash 14400 (1600*$9) Retained earnings 12800 (balancing figure) Paid in capital in excess-Tresury Stock 4800 Treasury Stock (at cost) 32000 (1600*$20) (issue of 1600 treasury stock)
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