Must show all calculations. Journal entries should be in proper format Zinnia Co
ID: 2529216 • Letter: M
Question
Must show all calculations. Journal entries should be in proper format
Zinnia Company:
Zinnia Company incorporated on January 1, 2017. The company had authorized 1,500,000 shares of common stock, with a par value of $5 per share. The company had the following transactions during 2017:
Jan. 15 Issued 50,000 shares of common stock for $8 per share.
Sept. 1 Repurchased 5,000 shares of their common stock for $7 per share.
Nov. 1 Declared a $.50 per share cash dividend to be paid on Dec. 30 to stockholders of record on Dec. 1.
Required:
1. Prepare the necessary journal entries to record the above transactions.
Date
Account Titles
Debit
Credit
2. Assume that Zinnia Company declared a 15% stock dividend on Nov. 1 instead of a cash dividend. If the stock was trading at $10 per share on Nov. 1, what journal entry would the company record on Nov. 1?
Date
Account Titles
Debit
Credit
Date
Account Titles
Debit
Credit
Explanation / Answer
Zinnia Company Journal Entries Date Partcular Amount (DR) Amount(CR) 15-Jan Cash A/c=(50000*$8) $ 400,000.00 Common Stock=(50000*$5) $ 250,000.00 Additional Paid in capital(50000*$3) $ 150,000.00 1-Sep Treasury Stock=(5000*$7) $ 35,000.00 To Cash=(5000*$5) $ 25,000.00 Additional Paid in Capital=(5000*$2) $ 10,000.00 (Being amount of 5000 shares repurchased for $7 per share) 1-Nov Retained Earnings A/c=(50000-5000)*.50 $ 22,500.00 To Dividend Payable $ 22,500.00 (Being amount of dividend ddeclared) 1-Nov Retained Earnings Account=(45000*15%*$10) $ 67,500.00 To Common Stock=(45000*15%*$5) $ 33,750.00 To Paid in capital excess of par=(45000*15%$5) $ 33,750.00 (Being amount of stock dividend declared)
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