Prepare journal entries for ABC Co.’s following events. 05/12/08 Received charte
ID: 2532627 • Letter: P
Question
Prepare journal entries for ABC Co.’s following events. 05/12/08 Received charter authorizing ABC Co. to issue 40,000 shares of common stock at a par value of $2 per share. 06/03/08 Issued 18,000 shares of stock, receiving $40,000.
06/04/08 Paid the law firm of Lo, Ball and Hyde for their services to help organize the company by sending them one thousand shares of stock.
11/15/08 Declared a cash dividend of $3 per share, payable on 01/15/09, to holders of record as of 12/15/08.
12/15/08 Make the appropriate entry. 12/31/08 Make any necessary adjusting entry.
01/15/09 Make the appropriate entry.
06/12/09 Declared a ten percent (10%) stock dividend, payable on 7/15/09 (ignore the date of record for this event).The market value of the stock is $20 per share.
07/15/09 Make the appropriate entry. 08/15/09 Declared a two-for-one stock split. The market value of the stock is $22 per share. 09/15/09 Declared and paid a cash dividend of $2 per share (pretend this happens all in one day).
10/01/09 Purchased 2,000 shares of treasury stock for a total price of $40,000.
10/15/09 Declared and paid a cash dividend of $2 per share.
11/15/09 Reissued 400 shares of treasury stock at $32 each.
12/15/09 Reissued the remaining treasury stock at $9 per share.
Explanation / Answer
Journal Entry Date Particulars Dr. Amt. Cr. Amt. 6/3/2008 Cash 40,000.00 Common Stock 36,000.00 18,000 Shares X $2 Paid in Capital in Excess of Par 4,000.00 $40,000 - $36,000 (To record the issue of common stock) 6/4/2008 Organisation Expenses 2,222.00 ($40,000 / 18,000 Sh.) X 1000 Sh. Common Stock 2,000.00 1,000 Shares X $2 Paid in Capital in Excess of Par 222.00 (To record the issue of common stock) 11/15/2008 Retained Earnings 57,000.00 19,000 Shares X $3 Dividends Payable 57,000.00 (to record the dividend payable) 12/15/2008 No entry 1/15/2009 No entry 1/15/2009 Dividends Payable 57,000.00 Cash 57,000.00 (To record the dividends paid) 6/12/2009 Retained Earnings 38,000.00 19,000 Shares X 10% X $20 Stock Dividends Payable 3,800.00 1,900 Shares X $2 Paid in Capital in Excess of Par 34,200.00 1,900 Shares X $18 (to record the stock dividend declared) 7/15/2209 Stock Dividends Payable 3,800.00 Common Stock 3,800.00 (to record the sock dividend issued) 8/15/2009 No Entry 9/15/2009 Retained Earnings 83,600.00 41,800 Shares X $2 Cash 83,600.00 (to record the cash dividend declared & Paid) 10/1/2009 Treasury Stock 40,000.00 Cash 40,000.00 (To record the purchase of Treasury Stock) 10/15/2009 Retained Earnings 79,600.00 39,800 Shares X $2 Cash 79,600.00 (to record the cash dividend declared & Paid) 11/15/2009 Cash 12,800.00 400 Shares X $32 Treasury Stock 8,000.00 400 Shares X $20 Paid in Capital in Excess of Par - Treasury Stock 4,800.00 400 Shares X $12 (To record the issue of Treasury stock) 12/15/2009 Cash 14,400.00 1,600 shares X $9 Paid in Capital in Excess of Par - Treasury Stock 4,800.00 Treasury Stock 19,200.00 1,600 Shares X $12 (To record the issue of Treasury stock)