Accounting Principles I- Financial Ch. 11 TBC-Common Stock Transactions Dewey Co

Question

Accounting Principles I- Financial Ch. 11 TBC-Common Stock Transactions Dewey Corporation began operations on September 1, 2018. The corporation's charter authorized 300,000 shares of $8 par value common stock. Dewey engaged in the following transactions during its first quarter Sept. 1 Oct. 1 Oct. 15 Issued 50,000 shares of common stock for cash, $50,000. Issued 80,000 shares of common stock for cash, $960,000. Declared a cash dividend of $0.40 per share to be paid on Nov. 28 to to stockholders of record on Nov. 15 Nov. 15 Date of record. Nov. 28 Paid the cash dividend. Part 1 Record the above transactions using the $8 par value. Part 2 Record the above transactions if the stock had no par or stated value.

Explanation / Answer

Part -1 If share has stated value of $8 Date Accounts Debit$ Credit$ Sept.1 Cash (50000 shares*1) $      50,000 Discount on shares (50000 shares*7) $     350,000 Common stock (50000 shares*8) $     400,000 Oct.1 Cash (80000 shares*12) $     960,000 Premium on shares (80000 shares*4) $     320,000 Common stock (80000 shares*8) $     640,000 Oct.15 Retained Earnings (130,000 shares*$0.40) $      52,000 Dividend Payable $      52,000 Nov.15 No Entry required Nov.28 Dividend Payable $      52,000 Cash $      52,000 Part -2 If share has no stated value. Date Accounts Debit$ Credit$ Sept.1 Cash $      50,000 Common stock $      50,000 Oct.1 Cash $     960,000 Common stock $     960,000 Oct.15 Retained Earnings (130,000 shares*$0.40) $      52,000 Dividend Payable $      52,000 Nov.15 No Entry required Nov.28 Dividend Payable $      52,000 Cash $      52,000

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