Accounting Brief Exercises
Accounting Brief Exercises
Brief Exercise 15-13
| Account Title and Explanation | Debit | Credit |
| Declaration Date
Retained Earning Common Stock Dividend Distributed Paid-in Capital in Excess of Par-Common Stock |
$1,469,345 |
$206,950 $1,262,395 |
| Distribution Date
Common Stock Dividend Distributed Common Stock |
$206,950 |
$206,950 |
Green Day Corporation has outstanding 413,900 shares of $10 par value common stock. The corporation declares a 5% stock dividend when the fair value of the stock is $72 per share.
Prepare the journal entries for Green Day Corporation for both the date of declaration and the date of distribution
Brief Exercise 15-2
Swarten Corporation issued 730 shares of no-par common stock for $11,740.
Prepare Swarten’s journal entry if (a) the stock has no stated value, and (b) the stock has a stated value of $3 per share.
| No. | Account Title and Explanation | Debit | Credit |
| a. | Cash
Common Stock |
$11,740 |
$11,740 |
| No. | Account Title and Explanation | Debit | Credit |
| b. | Cash
Common Stock (730×$3) Additional Paid-in Capital |
$11,740 |
$2,190 $9,550 |
Exercise 15-21
The outstanding capital stock of Edna Millay Corporation consists of 2,000 shares of $102 par value, 6% preferred, and 6,000 shares of $52 par value common.
Assuming that the company has retained earnings of $110,000, all of which is to be paid out in dividends, and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of stock should receive under each of the following conditions.
(a) The preferred stock is noncumulative and nonparticipating.
Preferred dividend = 2,000 shares ×$102 par value × 6% dividend = $12,240
Total Remaining Payout = $110,000 -$12,240 = $98,760
Preferred dividend = $12,240
Common dividend = $98,760
(b) The preferred stock is cumulative and nonparticipating.
Preferred dividend, 2 prior years =2, 000 shares ×$102 par value × 6% dividend ×2 = $24,480
Preferred dividend, this year = 2000 shares × $102 par value × 6% dividend = $12,240
Remaining Payout = $110,000-$24,480 -$12,240 = $73,280
Preferred dividend =$36,720
Common dividend =$73,280
(c) The preferred stock is cumulative and participating.
Preferred dividend, 2 prior years =2, 000 shares ×$102 par value × 6% dividend ×2 = $24,480
Preferred dividend, this year = 2000 shares × $102 par value × 6% dividend = $12,240
Common dividend = 6,000 shares ×$52 par value × 6% =$18,720
Remaining payout = $110,000 – $24,480 -$12,240 – $18,720 =$55,560
Par value of stock to participate:
Preferred = 2,000 shares ×$102 = $204,000
Common = 6,000 shares ×$52 = $312,000
Participating payout
Preferred =$55,560 × ($204,000÷$516,000) = $21,966
Common = $55,560 × ($312,000÷$516,000) = $33,594
Total preferred dividend = $58,686
Total common dividend = $52,314
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