(a) Journalize the transactions. (Include entries to close net income and divide
ID: 2571797 • Letter: #
Question
(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
Date
Account Titles and Explanation
Debit
Credit
(To record net income)
(To close cash dividends)
(To record payment of cash dividends payable)
The stockholders’ equity accounts of Monty Corp. on January 1, 2017, were as follows.Preferred Stock (6%, $100 par noncumulative, 4,900 shares authorized) $294,000 Common Stock ($3 stated value, 335,000 shares authorized) 837,500 Paid-in Capital in Excess of Par Value—Preferred Stock 14,700 Paid-in Capital in Excess of Stated Value—Common Stock 536,000 Retained Earnings 695,000 Treasury Stock (4,900 common shares) 39,200
During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity.
Feb. 1 Issued 5,310 shares of common stock for $37,170. Mar. 20 Purchased 1,300 additional shares of common treasury stock at $9 per share. Oct. 1 Declared a 6% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a $0.70 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017. Dec. 31 Determined that net income for the year was $278,600. Paid the dividend declared on December 1.
Explanation / Answer
SOLUTION
Journal Entries-
* Share outstanding = 837,500 / 3 = 279,167 - treasury stock (4,900) = 274,267
Total shares outstanding = 274,267 + 5,310 - 1.300 = 278,277
Date Accounts title and Explanations Debit ($) Credit ($) Feb.1 Cash 37,170 Common stock (5,310 * $3) 15,930 Paid-in Capital in Excess of Stated Value-Common Stock 21,240 (To record issuance of shares) Mar.20 Treasury stock (1,300 * $9) 11,700 Cash 11,700 (To record purchase of additional treasury stock) Oct.1 Retained earnings (294,000 * 6%) 17,640 Dividend payable 17,640 (To record dividend payable on preferred stock) Nov. 1 Dividend payable 17,640 Cash 17,640 (To record payment of dividend) Dec.1 Retained earnings ($0.70 * 278,277) 194,794* Dividend payable 194,794 (To record dividend payable) Dec.31 Income Summary 278,600 Retained Earnings 278,600 (To record net income) Retained Earnings (17,640 + $194,794) 212,434 Dividends 212,434 (To close cash dividends) Dividends Payable 194,794 Cash 194,794 (To record payment of cash dividends payable)Related Questions
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