189. The following selected transactions took place during the current year for a company:
March 25 Declared a $2 per share cash dividend on 20,000 shares of common stock
outstanding
April 20 Paid the cash dividends declared on March 25.
Dec 31 Closed the $52,000 credit balance in Income Summary that reflects net income to
Retained Earnings.
(a) Prepare the journal entries for these transactions.
(b) If Retained Earnings had a $75,000 credit balance on January 1, calculate its year-end
balance as of December 31.
190. A company reported stockholders’ equity on January 1 of the current year as follows:
Common Stock, $5 par value, 1,000,000 shares authorized, 600,000 shares issued; Paid-in
Capital in Excess of Par Value, Common Stock, $1,025,000; Retained Earnings, $2,850,000.
Prepare journal entries to record the following transactions:
May 1 A cash dividend of $1.10 per common share was declared by the board of directors
to stockholders of record on May 20, payable June 1.
May 20 The date of record.
June 1 Paid the cash dividend.
191. For each of the following independent transactions a through d, prepare the necessary
journal entry:
(a) Declared a $0.40 per share cash dividend on 200,000 shares of preferred stock
outstanding.
(b) Declared and distributed a 12% stock dividend on 800,000 shares of $5 par value common
stock outstanding. Market price per common share on this date was $25.
(c) Declared and distributed a 2-for-1 stock split on 500,000 shares of $10 par value common
stock outstanding.
(d) Declared and distributed a 30% stock dividend on 400,000 common shares of $5 par value
common stock outstanding. Market price per common share on this date was $20.
192. A corporation has 200,000 shares of $10 par value common stock outstanding. The
following selected transactions related to the company’s stock took place during the current
year:
Apr. 15 Declared a 40% stock dividend to stockholders of record on May 1, to be
issued May 10. The current market value is $15 per common share.
May 1 Date of record.
May 10 Issued the common stock dividend.
Prepare the journal entries to record these transactions.
193. On May 1, a company’s board of directors declared a 10% stock dividend to be
distributed on June 1 to the stockholders of record on May 21. The company had 250,000
shares of $10 par value common stock outstanding with a market value of $22 per share.
Prepare the journal entries required on May 1, May 21, and June 1.
194. A corporation had stockholders’ equity on January 1 as follows: Common Stock, $5 par
value, 1,000,000 shares authorized, 500,000 shares issued; Paid-in Capital in Excess of Par
Value, Common Stock, $1,000,000; Retained Earnings, $3,000,000. Prepare journal entries to
record the following transactions:
Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on
March 1, to be issued on March 20. The stock was trading at $6 per share prior to
the dividend
Mar. 1 The date of record.
Mar. 20 Issued the stock dividend.
195. A corporation had stockholders’ equity on January 1 as follows: Common Stock, $10 par
value, 1,500,000 shares authorized, 600,000 shares issued; Paid-in Capital in Excess of Par
Value, Common Stock, $1,000,000; Retained Earnings, $2,500,000. Prepare journal entries to
record the following transactions:
Feb. 15 The board of directors declared a 10% stock dividend to stockholders of record on
March 1, to be issued on April 15. The stock was trading at $12 per share prior to the
dividend.
Mar. 31 Sold 100,000 shares of common stock for $11 per share.
Apr. 15 Issued the stock dividend.
196. A company had the following stockholders’ equity on January 1:
Common Stock – $1 par value; 1,000,000 shares authorized,
400,000 shares issued and outstanding ……………………. $ 400,000
Paid-in capital in excess of par value, common stock ………. 300,000
Retained earnings …………………………………………… 364,000
Total stockholders’ equity …………………………………… $1,064,000
On January 10, the company declared a 40% stock dividend to holders of record on January
25, to be distributed January 31. The market value of the stock on January 10 prior to the
dividend was $20 per share. What is the book value per common share on February 1?
13–85
197. A company reported the following stockholders’ equity on January 1 of the current year:
Common stock, $10 par, 1,000,000 shares
authorized, 400,000 shares issued ………………….. $ 4,000,000
Paid-in capital in excess of par, common ……………… 1,200,000
Retained earnings ……………………………………… 1,600,000
Total stockholders’ equity …………………..…………. $6,800,000
Prepare journal entries for the following selected transactions related to this company’s stock
during the current year:
Mar. 1 Purchased 10,000 shares of treasury stock for $17 per share.
May 5 Sold 4,000 shares of treasury stock for $16 per share.
Oct. 12 Sold 2,000 shares of treasury stock for $18 per share.
198. A company’s only treasury stock transactions for the current year follow: (1) 1,000
shares of its common stock were purchased on June 1 for $40,000; (2) On July 1 it reissued
500 of these shares at $45 per share; (3) On August 1 it reissued the 500 remaining treasury
shares at $38 per share.
1) Prepare the journal entries required to record these transactions.
2) Calculate the balance in Paid-in Capital, Treasury Stock, on September 1 assuming its
beginning-year balance is zero.
199. On January 10, a corporation purchased 5,000 shares of its own common stock at $17.50
per share. On August 4, a total of 1,000 treasury shares were sold at $19.00 per share. These
are the only treasury stock transactions ever made by the corporation. Prepare the journal
entries required on January 10 and August 4.
200. Record the following transactions of a company in general journal form:
(a) Reacquired 8,000 of its own $10 par value common stock at $40 cash per share. The stock
was originally issued at $15 per share.
(b) Sold 2,000 shares of the stock reacquired under part (a) at $43 cash per share.
(c) Sold 3,000 shares of the stock reacquired under part (a) at $39 cash per share.
Fill in the Blank Questions
201. _______________________ are responsible for and have final authority for managing a
corporation’s activities.
202. A corporation is responsible for its own acts and debts. This is because a corporation is
considered a ____________________________________.
203. The _______________________ protects stockholders’ proportional interest in a
corporation by allowing them to purchase their proportional share of any common stock later
issued by the corporation.
204. A stock _________________ keeps stockholder records and prepares official lists of
stockholders for stockholder meetings and dividend payments.
205. ________________________ is the number of shares that a corporation’s charter allows
it to sell.
206. The total amount of cash and other assets the corporation receives from its stockholders
in exchange for common stock is called __________________________.
207. The cumulative net income and loss retained by a corporation is called ____________.
208. Stock that has been issued and is held by stockholders is ___________________ stock.
209. ________________ is a class of stock assigned a value by the corporation in its charter.
210. Stock that is not assigned a value per share by the corporate charter is called _________.
211. _____________________ is a general term that refers to any shares issued to obtain
owner financing in a corporation.
212. The least amount that the buyers of stock must contribute to the corporation or be subject
to paying at a future date is called ____________________________.
213. ___________________________ are corrections of material errors in prior period
financial statements.
214. _____________ is the amount of income earned per share of a company’s outstanding
common stock.
215. _______________________ is the stockholders’ equity applicable to common shares
divided by the number of common shares outstanding.
216. __________________________ is the annual amount of cash dividends distributed to
common shareholders relative to the stock’s market price.
217. When preferred stock is cumulative and the directors either do not declare a dividend to
preferred stockholders or declare one that does not cover the total amount of cumulative
dividends, the unpaid amount is called ____________________________.