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Italian Stallion has the following transactions during the year related to stockholders’ equity. February 1 Issues 5,500 shares of no-par common stock for $14 per share. May 15 Issues 600 shares of $10 par value, 10% preferred stock for $11 per share. October 1 Declares a cash dividend of $1.00 per share to all stockholders of record (both common and preferred) on October 15. October 15 Date of record. October 31 Pays the cash dividend declared on October 1.Required: Record each of these transactions.

Respuesta :

Answer:

The Journal entries are as follows:

(i) On February 1,

Cash A/c[ 5,500 × $14]     Dr. $77000

To Common Stock                             $77000

(To record issue of common stock)

(ii) On May 15,

Cash A/c                   Dr. 6,600

To preferred stock                    6,000

To Premium on issue             600

(To record preferred stock)

(iii) On October 1,

Dividend A/c       Dr. $6,100

To Dividend payable to common stockholders     $5,500

To Dividend payable to preference stock holders $600

(To record the cash dividend declares)

(iv) On October 15,

No entry required

(v)  On October 31,

Dividend payable to common stockholders A/c       Dr. $5,500

Dividend payable to preference stock holders A/c  Dr. $600

To cash                                                                                              $6,100

(To record dividend paid)

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