Michael Inc. is authorized to issue 50,000 shares of $50 par value, 8% cumulativ
ID: 2481719 • Letter: M
Question
Michael Inc. is authorized to issue 50,000 shares of $50 par value, 8% cumulative, preferred stock and 750,000 shares of $5 par value common stock. Please prepare journal entries to record the following transactions that occurred during the first year of operations:
A. Jan. 10 sold 96,000 shares of common stock for $10 a share.
B. on December 1, declared $1.00 per share cash dividend on 96,000 shares common stock outstanding.
C. December 15, cash dividend date of record:
D. on January 1 the cash dividend was paid to shareholders.
Explanation / Answer
A. Cash Dr $960000
To Common Stock $480000
To Capital in excess of par $480000
(Common stock issued at a premium of $5 per share)
B. Dividend expense Dr $96000
To Dividend Payable $96000
(Dividend @ $1 per share declared)
C. No journal entry required.
D. Dividend payable Dr $96000
To Cash $96000
(Dividend @ $1 per share declared on Dec 1 now paid in cash)