Question

On January 1, 2019, the stockholders' equity section of Green Mountains Corporation's balance sheet reported the following: Common stock, par $1, authorized 100,000 shares, issued 10,000 shares $10,000 Additional paid-in capital 150,000 Retained earnings 160,000 During 2019, the following selected transactions occurred (assume they occurred in the order given):
April 1 Issued a 10% stock dividend when the market price was $20. The stock dividend is considered small.
May 1 200 shares of treasury stock were purchased at $18 per share.
September 1 Announced 2 for 1 stock split
December 1 Declared and paid a cash dividend of $0.5 per share.
Required: Journalize all the transactions listed above for equity during 2019.

Answer 1

Answer:

Date     Account Titles and Explanation         Debit       Credit

Apr 1     Retained earnings                              $20,000

             [10000*10%]*$20

                    To common stock                                          $1,000

                     {1000*$1]

                     To additional Paid-in-capital                         $19,000

                      -Common stock [1000*(20-1)

              (To record stock dividends)

May 1    Cash                                                       $3,600

             (200*$18)

                   To treasury stock                                             $3,600

             (To record purchase of treasury stock)

Sept 1   No entry

Dec 1  Retained earnings                                   $10,800

          [(10000+1000-200)*2]*$0.5

                  To cash                                                               $10,800

           (To record declaration and payment of cash dividends)