Bird Inc. was organized and authorized to issue 5,000 shares of $100 par value,
ID: 2529620 • Letter: B
Question
Bird Inc. was organized and authorized to issue 5,000 shares of $100 par value, 9% preferred stock and 50,000 shares of no par, $5 stated value common stock on July 1, 2017. Stock related transactions for Bird Inc. are as follows:
July 1 Issued 10,000 shares of common stock at $11 per share.
July 1 Issued 500 shares of common stock at $11 per share for services rendered in connection with the organization of the company.
July 2 Issued 1,000 shares of preferred stock at par value for cash.
July 10 Issued 2,500 shares of common stock for land. The transaction will be valued at the current market price of the stock, which is $12 per share.
Aug 2 Purchased 1,500 shares of its common stock at $13 per share.
Aug 10 Declared a $750 cash dividend on preferred stock and a $230 cash dividend on common stock.
Aug 12 Date of record for cash dividends Aug 22 Paid cash dividends
Instructions: Prepare journal entries to record these transactions
Explanation / Answer
In the Books of Bird Inc. Journal Entries Date Particulars Debit Credit 1st July Bank A/C Dr 110000 To Share Capital A/C 50000 To Security Reserve A/C 60000 (Being 10000 shares issued @ $ 11) 1st July Sundry Creditors A/C Dr 5500 To Share Capital A/C 2500 To Security Reserve A/C 3000 (Being 10000 shares issued @ $ 11 for Services Rendred) 2nd July Bank A/C Dr 100000 To 9% Prefernce Share Capital A/C 100000 (Being 1000 9% Prefernce shares issued @ $ 11) 10th July Land (aseet) A/C Dr 30000 To Share Capital A/C 12500 To Security Reserve A/C 17500 (Being 2500 shares issued @ $ 12 for Land) 2nd Aug Share Buy Back A/C Dr 19500 To Bank A/C 19500 (Being 1500 Share Bought Back @ 13each) 2nd Aug Share Capital A/C Dr 7500 Security Reserve A/C 12000 To Share Buy Back A/C Dr 19500 (Being 1500 Share Bought Back @ 13each) 10th Aug Dividend A/C Dr 750 To Dividend Payable A/C 750 ( Being Divident Declared to pay $ 750 to Prefernce Stock) 10th Aug Dividend A/C Dr 230 To Dividend Payable A/C 230 ( Being Divident Declared to pay $ 230 to Common Stock) 22nd Aug Dividend Payable A/C Dr 980 To Bank A/C 980 ( Being Divident paid $ 230 to Common Stock and $ 750 to Prefence Stock) Total 286460 286460
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