Question

Instructions Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows: Split the common stock 2 for 1 and reduced the par from S80 to $40 per share. After the split, there were 150,000 common shares outstanding. Declared semiannual dividends of $0.75 on 18,000 shares of preferred stock and $0.28 on the common stock payable on July 1 Jan. 8 Apr 30 Jul. 1 Paid the cash dividends Oct. 31 Declared semiannual dividends of S0.75 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $52. Paid the cash dividends and issued the certificates for the common stock dividend. Dec. 31 Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Should be 13 Entries

Answer 1

Answer

Date General Journal No entry is required for stock split. Before and after the stock split, the total par value remains same. Other account balances within stockholders' equity also remain the same. Only the par value per share becomes half in case of 2 to 1 stock split Debit Credit Jan 8 Declared a dividend Apr 30 Retained Earnings Cash Dividends Payable (0.28 x 150,000)-Common Stock 55,500 Cash Dividends Payable (0.75 x 18000)-Preferred 42,000 13,500 Cash Dividends Payable (0.28 x 150,000)-Common Stock Jul 1 42,000 Cash Dividends Payable (0.75 x 18000)-Preferred Cash 13,500 55,500 Retained Earnings Cash Dividends Payable (0.14 x 150,000)-Common Stock Cash Dividends Payable (0.75 x 18000)-Preferred Oct 31 34,500 21,000 13,500 Retained Earnings (150,000 shares x 5%) x $52 Stock Dividend Distributable Oct 31 390,000 390,000 Cash Dividends Payable (0.14x 150,000)-Common Cash Dividends Payable (0.75 x 18000)-Preferred13,500 Cash Dec 31 21,000 34,500 Stock Dividend Distributable Common Stock @$40 Par Paid in capital in excess of par-Common Stock Dec 31 390,000 300,000 90,000