Intertrode was organized to operate as a software consulting business. The chart

Question

Intertrode was organized to operate as a software consulting business. The charter authorized the following capital stock: common stock, par value $1 per share. During the first year of operations, the following transactions were completed.

Jan 5 Sold and issued 15,000 share of common stock for $25 per share.

Jan 5 Sold and issued 5,000 share of common stock for $30 per share.

May 1 Declared cash dividends totaling $1 per outstanding share.

May 15 Paid cash dividends totaling $1 per outstanding share.

Use horizontal analysis to record the above transactions.

Explanation / Answer

Date Particulars Cash Dividends Payable Equity Retained Earnings Jan 5 Issue of Shares@$25 $375000 $15000 $360000 Jan 5 Issue of Shares@$30 $150000 $5000 $145000 May 1 Dividends Declared $20000 ($20000) May 15 Dividends Paid ($20000) ($20000) Balance $505000 Nil $20000 $485000

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