On March 1, 2014, Kissell Corporation began operations with a charter from the s

Question

On March 1, 2014, Kissell Corporation began operations with a charter from the state that authorized 100,000 shares of $4 par value common stock. Over the next quarter, the company engaged in the transactions that follow.

Hint(s)

1. Record the T accounts for Dividends and Dividends Payable using the information above

Mar. 1   Issued 30,000 shares of common stock, $200,000. 2   Paid fees associated with obtaining the charter and starting up and organizing the corporation, $24,000. Apr. 10   Issued 13,000 shares of common stock, $130,000. 15   Purchased 5,000 shares of common stock, $50,000. May 31   The board of directors declared a $0.20 per share cash dividend to be paid on June 15 to shareholders of record on June 10.

Explanation / Answer

Answer: Journal entry:

Mar. 1 issued 30,000 shares of common stock, $200,000
Dr Cash 200,000
Cr Common stock 120,000 (30,000 x par $4)
Cr Additional paid-in capital 80,000
At this point, there are 30,000 shares issued and outstanding

Mar 2 Paid fees associated with obtaining the charter and starting up and organising the corporation, $24,000
Dr Organisation costs/expenses 24,000
Cr Cash 24,000

Apr. 10 Issued 13000 shares of common stock, $130,000
Dr Cash 130,000
Cr Common stock 52,000 (13000 x par $4)
Cr Additional paid-in capital 78,000
At this point there are 43000 shares issued and outstanding

Apr. 15 Purchased 5000 shares of common stock, $50,000
Dr Treasury stock 50,000
Cr Cash 50,000
At this point there are 43000 shares issued but only 38,000 issued AND outstanding.

May 31 The board of directors declared a $0.20 per share cash dividend to be paid on June 15 to shareholders of record on June 10.
Dr Retained earnings 7600
Cr Dividend payable 7600 (38,000 x $0.20)

June 15 Paid the dividend.
Dr Dividend payable 7600
Cr Cash 7600

Dividend Payable A/C 10-Jun by retained earnings 7600 15-Jun to cash A/C 7600

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