Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows:
Jan. 9 Split the common stock 3 for 1 and reduced the par from $75 to $25 per share. After the split, there were 1,092,000 common shares outstanding.
Feb. 28 Purchased 39,500 shares of the corporation’s own common stock at $29, recording the stock at cost.
May 1 Declared semiannual dividends of $0.60 on 74,300 shares of preferred stock and $0.14 on the common stock to stockholders of record on June 1, payable on July 10.
Jul. 10 Paid the cash dividends.
Sep. 7 Sold 28,500 shares of treasury stock at $33, receiving cash.
Oct. 1 Declared semiannual dividends of $0.60 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $38.
Dec. 1 Paid the cash dividends and issued the certificates for the common stock dividend
For stock splits, no formal journal entries are neccessary. You could make a notation that the par value has been reduced and that there are now number of of common stock outstanding.
| Date | description | Debit $ | Credit $ |
| 28-Feb | Common Treasury Stock | 1145500 | |
| Cash | 1145500 | ||
| (39500*29) | |||
| 1-May | Dividends | 191930 | |
| Preferred Dividends Payable | 44580 | ||
| Common Dividends Payable | 147350 | ||
| (1092000-39500)*0.14 0.60*74300 |
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| 10-Jun | Preferred Dividends Payable | 44580 | |
| Common Dividends Payable | 147350 | ||
| Cash | 191930 | ||
| 7-Sep | Cash | 940500 | |
| Common Treasury Stock | 826500 | ||
| Paid-In Capital from Sale of Treasury Stock |
114000 | ||
| (28500*33 28500*27 28500*6) |
|||
| 1-Oct | Dividends | 195920 | |
| Preferred Dividends Payable | 44580 | ||
| Common Dividends Payable | 151340 | ||
| (1092000-39500+28500)*0.14 0.60*74300 |
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| 1-Oct | Stock Dividends | 2053900 | |
| Stock Dividends Distributable | 1351250 | ||
| Paid-In Capital in Excess of Par, Common Stock |
702650 | ||
| (1081000*5%*25 per shate) (1081,000 x 5% x 13over par) |
|||
| 1-Dec | Preferred Dividends Payable | 44580 | |
| Common Dividends Payable | 151340 | ||
| Cash | 195920 | ||
| 1-Dec | Stock Dividends Distributable | 1351250 | |
| Common Stock | 1351250 |
