PROBLEM 11 (8 points) Hi-tech Manufacturing Company has 1,000,000 shares of $1 p

Question

PROBLEM 11 (8 points) Hi-tech Manufacturing Company has 1,000,000 shares of $1 par value common stock outstanding on January 1. The following equity transactions occurred during the current year. Prepare journal entries to record these transactions. a) June 1 Declared a cash dividend of $0.60 per share ful b) July 1 Paid the $0.60 cash dividend to stockholders c) August 1 Declared a 5 percent stock dividend. Market price of the stock was $19 per share d) September 10 Issued shares resulting from the 5 percent stock dividend declared on August 1

Explanation / Answer

a. June 1

b. July 1

c. August 1

5% of 1,000,000 shares multiplied by $19 = $950,000

d. September 10

Retained earnings (1,000,000 multiplied by $0.6) $600,000 Dividends payable $600,000 (Declared cash dividends payable to shareholders on July 1)

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