Italian Stallion has the following transactions during the year related to stock

Question

Italian Stallion has the following transactions during the year related to stockholders’ equity. February 1 Issues 5,500 shares of no-par common stock for $14 per share. May 15 Issues 600 shares of $10 par value preferred stock for $11 per share. October 1 Declares a cash dividend of $1.00 per share to all stockholders of record (both common and preferred) on October 15. October 15 Date of record. October 31 Pays the cash dividend declared on October 1. Required: Record each of these transactions.

Explanation / Answer

Journal:

Date Particulars Debit Credit Feb 1 Cash 77000           Common Stock 77000 May 15 Cash 6600           Prefered Stock 6000           Premium on issue 600 Oct 1 Dividend 6100          Dividend payable to common stockholders 5500          Dividend payable to preference stock holders 600 Oct 15 No Entry Oct 31 Dividend payable to common stockholders 5500 Dividend payable to preference stock holders 600          Cash 6100

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