Permabilt Corp. was incorporated on January 1, 2016, and issued the following st
ID: 2601739 • Letter: P
Question
Permabilt Corp. was incorporated on January 1, 2016, and issued the following stock for cash:
1,200,000 shares of no-par common stock were authorized; 352,000 shares were issued on January 1, 2016, at $28 per share.
394,000 shares of $90 par value, 9.30% cumulative, preferred stock were authorized, and 135,000 shares were issued on January 1, 2016, at $134 per share.
Net income for the years ended December 31, 2016, 2017, and 2018, was $5,240,000, $7,110,000, and $9,240,000, respectively.
No dividends were declared or paid during 2016 or 2017. However, on December 17, 2018, the board of directors of Permabilt Corp. declared dividends of $6,040,000, payable on February 9, 2019, to holders of record as of January 4, 2019.
1. Use the horizontal model for the issuance of common stock and preferred stock on January 1, 2016
2. Use the horizontal model for the declaration of dividends on December 17, 2018.
3. Use the horizontal model for the payment of dividends on February 9, 2019
Prepare the journal entries to record each of the below transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
The issuance of common stock and preferred stock on January 1, 2016.
The declaration of dividends on December 17, 2018.
The payment of dividends on February 9, 2019.
Of the total amount of dividends declared during 2018, how much will be received by preferred shareholders?
Explanation / Answer
Journal:
Workings:
workings:
Date Account Debit Credit Jan.1 Cash 9,856,000 To Common stock 9,856,000 [ No par common stock issued] Jan.1 Cash 18,090,000 To Preference share capital 12,150,000 To Additional paid in capital 5,940,000 [Prerred stock issued]Related Questions
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