Salisbury Corporation formed a corporation on January 3, 2016, and is authorized
ID: 2425722 • Letter: S
Question
Salisbury Corporation formed a corporation on January 3, 2016, and is authorized to issue 500,000 shares of $10 par value common stock. The company has the following stock transactions.
1/10/2016 – Issued 200,000 shares of stock at $16 per share.
1/25/2016 – The law firm that helped the company incorporate and file all forms for the stock issue accepts 1,000 shares of newly issued stock in lieu of cash for its legal bill rendered. The amount of the legal bill was $20,000.
6/10/2016 – Salisbury Corporation declares a 50 cent per share dividend payable July 15 to shareholders of record as of June 30, 2016.
6/30/2016 – The record date for the dividend declared on June 10.
7/15/2016 – The dividend declared on June 10 is paid.
9/15/2016 – Salisbury Corporation declares a 10% stock dividend payable on September 30 to shareholders of record as of September 20. The market value of the stock was $15 immediately prior to the declaration of the stock dividend.
9/30/2016 – The stock dividend declared on September 15 is paid.
10/15/2016 – Salisbury Corporation buys 5,000 shares of its own stock on the open market for $18 per share.
12/18/2016 – Salisbury Corporation resells 2,000 shares of the treasury stock for $20 per share.
Answer sheet
DATE
ACCOUNT TITLE
DEBIT
CREDIT
1/10/2016 – Issued 200,000 shares of stock at $16 per share.
1/25/2016 – The law firm that helped the company incorporate and file all forms for the stock issue accepts 1,000 shares of newly issued stock in lieu of cash for its legal bill rendered. The amount of the legal bill was $20,000.
6/10/2016 – Salisbury Corporation declares a 50 cent per share dividend payable July 15 to shareholders of record as of June 30, 2016.
6/30/2016 – The record date for the dividend declared on June 10.
7/15/2016 – The dividend declared on June 10 is paid.
9/15/2016 – Salisbury Corporation declares a 10% stock dividend payable on September 30 to shareholders of record as of September 20. The market value of the stock was $15 immediately prior to the declaration of the stock dividend.
9/30/2016 – The stock dividend declared on September 15 is paid.
10/15/2016 – Salisbury Corporation buys 5,000 shares of its own stock on the open market for $18 per share.
12/18/2016 – Salisbury Corporation resells 2,000 shares of the treasury stock for $20 per share.
Explanation / Answer
Date Accounts Title Dr Cr 1/10/2016 Cash (200000*16) $3,200,000 Common stock 2000000 Paid in capital in excess of par value 1200000 1/25/2016 Legal Expenses 20000 Common stock (1000*$10) 10000 Paid in capital in excess of par value 10000 6/10/2016 Retained Earnings (210000*10*.5) 1050000 Dividend Distribution ( Payable) 1050000 7/15/2016 Dividend Distribution (Payable) 1050000 Cash 1050000 9/15/2016 Retained earnings(210000*10%*$15) 315000 Stock Dividend distributable 315000 9/30/2016 Stock Dividend distributable 315000 Common stock 210000 Paid in capital in excess of par value 105000 10/15/2016 Treasury Stock 90000 Cash 90000 Cash 40000 Treasury Stock (2000*18) 36000 Paid in capital in excess-Treasury stock 4000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.