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Green Day Corporation has outstanding 400,000 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $65 per share. Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution.
Graves Mining Company declared, on April 20, a dividend of $500,000 payable on June 1. Of this amount, $125,000 is a return of capital. Prepare the April 20 and June 1 entries for Graves.
Cole Inc. owns shares of Marlin Corporation stock classified as an available-for-sale investment.
\r\nAt December 31, 2014, the available-for-sale securities were carried in Cole’s accounting records at their cost of $875,000, which equals their fair value. On September 21, 2015, when the fair value of the securities was $1,200,000, Cole declared a property dividend whereby the Marlin securities are to be distributed on October 23, 2015 to stockholders of record on October 8, 2015. Prepare all journal entries necessary on those three dates.
Woolford Inc. declared a cash dividend of $1.00 per share on its 2 million outstanding shares. The dividend was declared on August 1, payable on September 9 to all stockholders of record on August 15.
\r\nPrepare all journal entries necessary on those three dates.
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Hinges Corporation issued 500 shares of $100 par value preferred stock for $61,500. Prepare Hinges’s journal entry.
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Arantxa Corporation has outstanding 20,000 shares of $5 par value common stock. On August 1,
\r\n2014, Arantxa reacquired 200 shares at $80 per share. On November 1, Arantxa reissued the 200 shares at $70 per share. Arantxa had no previous treasury stock transactions. Prepare Arantxa’s journal entries to record these transactions using the cost method.
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Sprinkle Inc. has outstanding 10,000 shares of $10 par value common stock. On July 1, 2014,
\r\nSprinkle reacquired 100 shares at $87 per share. On September 1, Sprinkle reissued 60 shares at $90 per share. On November 1, Sprinkle reissued 40 shares at $83 per share. Prepare Sprinkle’s journal entries to record these transactions using the cost method.
Moonwalker Corporation issued 2,000 shares of its $10 par value common stock for $60,000. Moonwalker also incurred $1,500 of costs associated with issuing the stock. Prepare Moonwalker’s journal entry to record the issuance of the company’s stock.
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On February 1, 2014, Buffalo Corporation issued 3,000 shares of its $5 par value common stock for land worth $31,000. Prepare the February 1, 2014, journal entry.
Ravonette Corporation issued 300 shares of $10 par value common stock and 100 shares of $50 par value preferred stock for a lump sum of $13,500. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.
Wilco Corporation has the following account balances at December 31, 2014.
\r\nCommon stock, $5 par value $ 510,000
\r\nTreasury stock 90,000
\r\nRetained earnings 2,340,000
\r\nPaid-in capital in excess of par—common stock 1,320,000
\r\nPrepare Wilco’s December 31, 2014, stockholders’ equity section.
Swarten Corporation issued 600 shares of no-par common stock for $8,200. Prepare Swarten’s journal entry if (a) the stock has no stated value, and (b) the stock has a stated value of $2 per share.
Buttercup Corporation issued 300 shares of $10 par value common stock for $4,500. Prepare Buttercup’s journal entry
Corp. had $100,000 of 7%, $20 par value preferred stock and 12,000 shares of $25 par value common stock outstanding throughout 2014.
\r\n(a) Assuming that total dividends declared in 2014 were$64,000, and that the preferred stock is not cumulative but is fully participating, common stockholders should receive 2014 dividends of what amount?
\r\n(b) Assuming that total dividends declared in 2014 were
\r\n$64,000, and that the preferred stock is fully participating and cumulative with preferred dividends in arrears for 2013, preferred stockholders should receive 2014 dividends totaling what amount?
\r\n(c) Assuming that total dividends declared in 2014 were
\r\n$30,000, that the preferred stock is cumulative, nonparticipating, and was issued on January 1, 2013, and that $5,000 of preferred dividends were declared and paid in 2013, the common stockholders should receive 2014 dividends totaling what amount?
How are restrictions of retained earnings reported?
For what reasons might a company restrict a portion of its retained earnings?
This comment appeared in the annual report of MacCloud Inc.: “The Company could pay cash or property dividends on the Class A common stock without paying cash or property dividends on the Class B common stock. But if the Company pays any cash or property dividends on the Class B common stock, it would be required to pay at least the same dividend on the Class A common stock.” How is a property dividend accounted for in the financial records?
The following comment appeared in the notes of Colorado Corporation’s annual report: “Such distributions, representing proceeds from the sale of Sarazan, Inc., were paid in the form of partial liquidating dividends and were in lieu of a portion of the Company’s ordinary cash dividends.” How would a partial liquidating dividend be accounted for in the financial records?
Stock splits and stock dividends may be used by a corporation to change the number of shares of its stock outstanding.
\r\n(a) What is meant by a stock split effected in the form of a dividend?
\r\n(b) From an accounting viewpoint, explain how the stock split effected in the form of a dividend differs from an ordinary stock dividend.
\r\n(c) How should a stock dividend that has been declared but not yet issued be classified in a balance sheet? Why?
Describe the accounting entry for a stock dividend, if any.
\r\nDescribe the accounting entry for a stock split, if any.
Distinguish among: cash dividends, property dividends, liquidating dividends, and stock dividends.
Dividends are sometimes said to have been paid “out of retained earnings.” What is the error, if any, in that statement?
What are the principal considerations of a board of directors in making decisions involving dividend declarations? Discuss briefly.
What factors influence the dividend policy of a company?
Indicate how each of the following accounts should be classified in the stockholders’ equity section.
\r\n(a) Common Stock.
\r\n(b) Retained Earnings.
\r\n(c) Paid-in Capital in Excess of Par—Common Stock.
\r\n(d) Treasury Stock.
\r\n(e) Paid-in Capital from Treasury Stock.
\r\n(f) Paid-in Capital in Excess of Stated Value—Common Stock.
\r\n(g) Preferred Stock.
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