Question

Selected Dividend Transactions, Stock Split:

Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows.

Journalize the transactions. If an amount box does not require an entry, leave it blank.


Jan. 8. Split the common stock 3 for 1 and reduced the par from $42 to $14 per share. After the split, there were 66,000 common shares outstanding.

Apr. 30. Declared semiannual dividends of $0.90 on 5,000 shares of preferred stock and $0.28 on the common stock payable on July 1.

July 1. Paid the cash dividends.

Oct. 31. Declared semiannual dividends of $0.75 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

Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend.

Answer 1

Answer and Explanation:

As per the data given in the question,

On Jan 8

No entry required

On Apr 30

Dividends A/c Dr. $22,980 (5,000 × 0.90 + 66,000 × 0.28)

To dividends payable Cr. $22,980

(Being the dividend is declared)

On July 1

Dividend payable A/c Dr. $22,980

To cash Cr. $22,980

(Being the dividend is paid)

On Oct 31

Dividends A/c Dr. $50,490 (66,000×0.14+5,000×0.75)

To dividends payable Cr. $50,490

(Being the dividend is declared)

Retained earnings A/c Dr. $171,600 (66,000×0.05×52)

To common stock dividend distributable Cr. $46200 (66,000 × 0.05× $14)

To paid in capital in excess of par Cr. $125,400 (66,000×0.05×(52-14))

(Being the common stock and paid in capital is recorded)

On Dec 31

Dividends payable A/c Dr. $50,490

To Cash Cr. $50,490

(Being the dividend is paid)

Common stock dividend distributable A/c Dr. $198,000 (66,000×3)

To Common stock Cr. $198,000

(Being the certificate for the common stock dividend is recorded)