On January 1, 2015, Thomson Inc. had the following account balances in its share

Question

On January 1, 2015, Thomson Inc. had the following account balances in its shareholders' equity accounts.

                       

                        Common stock, $1 par, 250,000 shares issued of

                        which 3,000 Shares being held as treasury stock             $250,000  

                        Paid-in capital excess of par, common                               500,000  

                        Preferred stock, $100 par, 10,000 shares outstanding      1,000,000

                        Paid-in capital excess of par, preferred                               100,000

                        Retained earnings                                                             2,000,000

                        Treasury stock, at cost, 3,000 shares                                    15,000

                       

                       

                        During 2015, Thomson Inc. had several transactions relating to common stock.

                       

                       

                        3/20                 Reissued 2,000 shares of treasury stock at $7 per share.

                        4/17                 Declared a 2 for 1 stock split on common stock effective 4/24.

                        7/18                 Declared and distributed a 5% stock dividend on outstanding                                               common stock; market value per share, $8.                      

11/1                 Declared a ten cents per share cash dividend on the outstanding      common shares.

                        11/25              Ex-dividend date for the cash dividend.

                        11/29              Date of record for the cash dividend.    

                        12/20              Paid the cash dividend declared on 11/1.

                       

                        Required:

Record the above transactions and events in the journal entry format.

Explanation / Answer

Solution:

Journal Entries - Thomson INC. Date Particulars Debit Credit 20-Mar-15 Cash Dr $14,000.00        To Treasury Stock $10,000.00        To Additional Paid in Capital $4,000.00 (To record issue of treasury stock) 17-Apr-15 No Entry 18-Jul-15 Retained Earnings Dr (249000*2*5%*$8) $199,200.00              To Stock dividend distributable $199,200.00 (to record declaration of stock dividend) 18-Jul-15 Stock Dividend distributable Dr $199,200.00              To Common Stock $24,900.00              To Paid in capital in excess of Par - Common stock $174,300.00 (To record distribution of stock dividend) 1-Nov-15 Retained Earnings Dr [(249000*2 + 24900)*0.10] $52,290.00              To Dividend Payable $52,290.00 (To record declaration of cash dividend) 25-Nov-15 No Entry 29-Nov-15 No Entry 20-Dec-15 Dividend Payable Dr $52,290.00              To Cash $52,290.00 (To record payment of cash dividend)

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