On December 31, 2015, Alpha had the following balances (all balances are normal)

Question

On December 31, 2015, Alpha had the following balances (all balances are normal): Accounts Amount Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding) $1,000,00 Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding) $1,000,000 The following events occurred during 2015 and were not recorded: On January 1, Alpha declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. b. Stock dividends were distributed on January 31 to shareholders as of January 25. c. On February 15, Alpha reacquired 1,000 shares of common stock for $20 each. d. On March 31, Alpha reissued 250 shares of treasury stock for $25 each e. On July 1, Alpha reissued 500 shares of treasury stock for $16 each. f. On October 1, Alpha declared full year dividends for preferred stock (see outstanding shares in table above). g. Then, paid preferred shareholders on October 15 h. On October 1, Alpha also declared $1.50 cash dividends per share for the 104,750 remaining common outstanding shares. i. Then, paid common shareholders on October 15 Requirements: Prepare journal entries for the transactions listed above.

Explanation / Answer

Date

2015

Details

Amount

$

Debit

A/c

Credit

A/c

a

Jan1

Declared a 5% dividend on Common Stock

50,000

Dividends

Common Stock Dividends Payable

b

Jan 31

Paid the dividend declared on Jan 1

50,000

Common Stock Dividends Payable

Cash

c

Feb

15

Reacquired 1,000 shares of common stock @ $20 each

10,000

Common Stock

Cash

Adjusted for excess of par for reacquisition

10,000

Excess of Par

Cash

d

Mar

31

250 treasury stock shares reissued @$25 each

2,500

Cash

Common Stock

3750

Cash

Excess of Par

e

Jul

1

Reissued 500 Treasury stock shares @ $16

5,000

Cash

Common Stock

Adjusted for excess of par for reissue

3,000

Cash

Excess of Par

f

Oct

1

5% dividend declared on Preference Stock

50,000

Preference Dividends

Preference Dividends Payable

g

Oct 15

Paid Preference stock dividends

50,000

Preference Dividends Payable

Cash

h

Oct 1

Declared dividends on 104750 common stock shares@ $ 1.50

157,125

Dividends

Common Stock Dividends Payable

I

Oct

15

Paid common stock dividend declared on Oct 1

157.125

Common Stock Dividends Payable

Cash

Date

2015

Details

Amount

$

Debit

A/c

Credit

A/c

a

Jan1

Declared a 5% dividend on Common Stock

50,000

Dividends

Common Stock Dividends Payable

b

Jan 31

Paid the dividend declared on Jan 1

50,000

Common Stock Dividends Payable

Cash

c

Feb

15

Reacquired 1,000 shares of common stock @ $20 each

10,000

Common Stock

Cash

Adjusted for excess of par for reacquisition

10,000

Excess of Par

Cash

d

Mar

31

250 treasury stock shares reissued @$25 each

2,500

Cash

Common Stock

3750

Cash

Excess of Par

e

Jul

1

Reissued 500 Treasury stock shares @ $16

5,000

Cash

Common Stock

Adjusted for excess of par for reissue

3,000

Cash

Excess of Par

f

Oct

1

5% dividend declared on Preference Stock

50,000

Preference Dividends

Preference Dividends Payable

g

Oct 15

Paid Preference stock dividends

50,000

Preference Dividends Payable

Cash

h

Oct 1

Declared dividends on 104750 common stock shares@ $ 1.50

157,125

Dividends

Common Stock Dividends Payable

I

Oct

15

Paid common stock dividend declared on Oct 1

157.125

Common Stock Dividends Payable

Cash

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