Selected transactions completed by Primo Discount Corporation during the current

Question

Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows: Jan. 9 Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,200,000 common shares outstanding. Feb. 28 Purchased 40,000 shares of the corporation’s own common stock at $28, recording the stock at cost. May 1 Declared semiannual dividends of $0.80 on 75,000 shares of preferred stock and $0.12 on the common stock to stockholders of record on June 1, payable on July 10. Jul. 10 Paid the cash dividends. Sep. 7 Sold 30,000 shares of treasury stock at $34, receiving cash. Oct. 1 Declared semiannual dividends of $0.80 on the preferred stock and $0.12 on the common stock (before the stock dividend). In addition, a 2% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $36. Dec. 1 Paid the cash dividends and issued the certificates for the common stock dividend. Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.
Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS Primo Discount Corporation General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 520 Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Selling Expenses 534 Rent Expense 535 Insurance Expense 536 Office Supplies Expense 537 Organizational Expenses 562 Depreciation Expense-Equipment 590 Miscellaneous Expense 710 Interest Expense

Explanation / Answer

Feb 28 Treasury Stock 1120000 Cash 1120000 May 1 Dividend to Preferred Shares 60000 Dividend payable 60000 0.80 * 75000 June 1 Cash dividend 139200 Dividend payable 139200 0.12 * 1160000 July 10 Dividend Payable 199200 Cash 199200 (being dividend paid to both preferred and common) Sep 7 Cash 1020000 Treasury Stock 840000 Additional Capital in excess of Par - Common 180000 (being treasury stock sold at 34) Oct 1 Dividend to Preferred Stock 60000 Dividend payable 60000 Cash Dividend 142800 Dividend payable 142800 (1200000 - 10000) Shares @0.12 Retained Earnings 856800 Common Stock distributable 595000 Additional Capital in excess of Par - Common 261800 (2% shares i.e. 23800 price at $36) Dec 1 Dividend payable 202800 CAsh 202800 Common Stock distributable 595000 Common Stock 595000

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