Question

Problem Set A (Figure Aggregate Mining Corporation was incorporated five years ago. It is authorized to issue 500,000 shares of ? 100 par value 8% preferred stock. It is also authorized to issue 750,000 shares of ?1 par value common stock. It has issued only 50,000 of the common shares and none of the preferred shares. In its sixth year, the corporation has the following transactions:
Mar. 1 Declares a cash dividend of ?2 per share
Mar. 30 Pays the cash dividend Jul. 10 Declares a 5% stock dividend when the stock is trading at ?15 per share
Aug. 5 Issues the stock dividend Journalize these transactions.​

Answer 1

• The journal entries are shown below:

On Mar. 1

Retained Earnings (50,000 ×2) $100,000  

         To Dividend Payable  $100,000

(Being the cash dividend is declared)

On Mar. 30

Dividend Payable $100,000  

        Cash  $100,000

(Being cash dividend is paid)

On Jul. 10

Retained Earnings (50000 × 5% × $1) $2500  

            Stock dividend payable  $2500

(Being stock dividend is declared)

On Aug. 5

Stock dividend payable $2500  

        Common Stock  $2500

(Being the issuance of the stock dividend is recorded)

Therefore we can conclude that the above journal entries are recorded.

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