section of Benton Corporation\'s balance sheet as of December 31, 2010 is as fol

Question

section of Benton Corporation's balance sheet as of December 31, 2010 is as follows: Stockholders' Equity Common stock, $5 par value; authorized, 2,000,000 shares; issued, 400,000 shares Paid-in capital in excess of par Retained earnings $2,000,000 850,000 3,000,000 $5,850,000 The following events occurred during 2011: 1. Jan. 5 10,000 shares of authorized and unissued common stock were sold for $8 per 2. Jan. 16 3. Feb. 10 4, March 1 share. Purchase back 1,000 treasury shares at $10 per share. Reissue all the treasury shares for $14 per share. A 30% stock dividend was declared and issued. Market value per share is currently $15. 5. April 1 A two-for-one split was carried out. The par value of the stock was to be reduced to $2.50 per share. Market value on March 31 was $18 per share. 6, July 1 A 15% stock dividend was declared and issued. Market value is currently $10 per share. per share was declared, payable September 1 to 1 A cash dividend of 20 cents Aug. stockholders of record on August 21. Requirements: provide journal entries for each of the above transactions.

Explanation / Answer

Amount in $ Date/S. N. Accounts Title & Explanation Debit Credit Jan-05 Cash      (10000 X 8) 80000 Common stock at par   (10000 X 5) 50000 Additional paid in capital   (10000 X 3) 30000 To record the sale of common stock at $8 per share Jan-16 Treasury Stock (1000 X 10) 10000 Cash (1000 X 10) 10000 To record the purchase of treasury stock Feb-10 Cash (1000 X 14) 14000 Treasury Stock (1000 X 10) 10000 Paid in capital from treasury stock (1000 X 4) 4000 To record the sale of treasury stock Mar-01 Stock dividends / Retained Earnings 615000 =30%*(400000+10000)*5 Common stock at par 615000 To record the distribution of stock dividends Note : the market value is not considered here as stock dividend is large i.e 30% of existing common stock. So we have issued stock dividends at par. Apr-01 NO Entry 0 Note : Stock split does not involve the journal entry. However we do have to remember that par value of stock changes and so does the number of Common stock. However, The value of common stock does not change. Jul-01 Stock dividends 799500 =15%*(400000+10000+123000)*10 Common stock at par 199875 =15%*(400000+10000+123000)*2.5 Additional paid in capital 599625 =15%*(400000+10000+123000)*7.5 To record the distribution of stock dividends Note : Stock dividends is small, so issued at market price Aug-01 Cash Dividends 106600 =0.2*(400000+10000+123000) Dividends payable 106600 To record the declaration of cash dividends Sep-01 Dividends payable 106600 Cash 106600 To record the payment of cash dividends declared

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