Selected transactions completed by ATV Discount Corporation during the current f

Question

Selected transactions completed by ATV Discount Corporation during the current fiscal year are as follows:

Jan. 5. Split the common stock 4 for 1 and reduced the par from $20 to $5 per share. After the split, there were 4,000,000 common shares outstanding. Mar. 10. Purchased 100,000 shares of the corporation’s own common stock at $30, recording the stock at cost. Apr. 30. Declared semiannual dividends of $0.25 on 30,000 shares of preferred stock and $0.08 on the common stock to stockholders of record on May 15, payable on June 15. June 15. Paid the cash dividends. Aug. 20. Sold 60,000 shares of treasury stock at $40, receiving cash. Oct. 15. Declared semiannual dividends of $0.25 on the preferred stock and $0.08 on the common stock (before the stock dividend). In addition, a 1% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $35. The dividend date of record is November 15 payable on December 19. Dec. 19. Paid the cash dividends and issued the certificates for the common stock dividend.

Explanation / Answer

Journal Entries Date Accouting titles & Explanations Debit Credit 5-Jan No entry 10-Mar Treasury stock        3,000,000 Cash (100,000*30)        3,000,000 30-Apr Cash dividend            319,500 Dividends payable            319,500 (preferred shares 30,000*.25   = 7500 (Common shares 3,900,000*.08= 312000 15-Jun Dividends payable            319,500 cash            319,500 20-Aug Cash (60000*40)        2,400,000 Treasury stock (60,000*30)        1,800,000 paid in capital from sale of treasury stock            600,000 15-Oct Cash dividend            324,300 Dividends payable            324,300 (preferred shares 30,000*.25   = 7500 (Common shares 3,960,000*.08= 316800 15-Oct Stock dividends (39,600*35)        1,386,000 Stock dividends distributable (39,600*5)            198,000 paid in capital in excess of par-CS        1,188,000 (3,960,000*1%= 39600 shares) 19-Dec Dividends payable            324,300 cash            324,300 19-Dec Stock dividend distributable            198,000 Common Stock            198,000

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