Question

On January 1, Skysong, Inc. had 90,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per share. During the year, the following occurred.

Apr1. Issued 21,000 additional shares of common stock for $19 per share.
June15. Declared a cash dividend of $1 per share to stockholders of record on June 30.
July10. Paid the $1 cash dividend. Dec.1Issued 2,500 additional shares of common stock for $18 per share.
December15. Declared a cash dividend on outstanding shares of $4.30 per share to stockholders of record on December 31.
Prepare the entries, on each of the three dividend dates. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.
Date Account Titles and Explanation Debit Credit
June15
July10
Dec15

Answer 1

No. of shares outstanding = A

Par Value (at $5) = B

Additional Paid in capital in excess of Par = C

Dividend = D

A B(A*$5) C D

Jan 1 balance 90,500 $452,500 $0

shares

Add: Issued Apr 1 21,000 $105,000 $294000

shares

June 30 Balance 111,500 $557,500 $294,000 $111,500

shares [111,500 shares x $1]

Add: Dec 1 Issued 2,500 shares $12,500 $32,500

Dec 31 Balance 114,000 $570,000 $326,500 $490,200

[114,000 shares x $4.3]

Journal Entries based on above

Date Accounts Titles Debit Credit

15-Jun Dividends $111,500

Dividends payable $111,500

10-Jun Cash $111,500

Dividends $111,500

15-Dec Dividends $490,200

Dividends payable $490,200