Question

Winterborn Manufacturing Co. completed the following transactions during 2016:

Jan 16. Declared a cash dividend on the 4â%, â$100 par noncumulative preferred stock â(950 sharesâ outstanding). Declared a $ 0.30 per share dividend on the 90,000 shares of â$10 par value common stock outstanding. The date of record is Januaryâ 31, and the payment date is February 15.
Feb. 15. Paid the cash dividends.Jun. 10. Split common stock 2-for-1.July 30. Declared a 50% stock dividend on the common stock. The market value of the common stock was $10 per share.Aug. 15. Distributed the stock dividend.Oct. 26. Purchased 1,400 shares of treasury stock at $9 per share.Nov. 8. Sold 700 shares of treasury stock for $11 per share.Nov. 30. Sold 500 shares of treasury stock for $6 per shareRequired:1. Record the transactions in Winterborn's general journal.2. Prepare the Winterborn's stockholders' equity section of the balance sheet as of December 31, 2016.

Answer 1

Dividends 30,800 debit

Dividends payable 30,800 credit

--to record cash dividends declared--

Dividends payable 30,800 debit

Cash 30,800 credit

--to record payment of cash dividends--

Jun 10 no entry required the split do not change the total value of the preferred stock

August 15th

Retained earnings 450,000 debit

Common stock 450,000 credit

--to record stock dividends--

treasury stock 12,600 debit

cash 12,600 credit

--to record purchase of treasury stock--

cash 7,700 debit

treasury stock 6,300 credit

additional paid-in TS 1,400 credit

--to record sale of TS--

cash 3,000 debit

additional paid-in TS 500 debit

treasury stock 3,500 credit

--to record sale of TS--

Step-by-step explanation:

Jan 16th cash dividends 950 shares x $100 par x 4% = $3,800

90,000 shares x 0.30 per share = 27,000

Total 27,000 + 3,800 = 30,800

July 30th:

value of the stock dividends:

90,000 shares x $10 x 50% = 450,000

recorded when distributed.

Treasury stock: we record at cost. Then at sale date we compare with this cost and determinate wether we create an additional paid-in for the stock or if we should decrease retained earnings when sale at "loss"

purchase: 1,400 shares x $9 per share = 12,600

sale 700 x $11 = 7,700

cost 700 x $ 9 = 6,300

addtional paid in TS 1,400

second sale 500 x $ 6 = 3,000

cost 500 x $ 7 = 3,500

decrease in additional paid-in TS 500