Question

Northwest Clothing Supply has the following transactions during the year related to stockholders' equity: January 1 Issues 4,000 shares of no-par value common stock for $15 per share. March 15 Issues 800 shares of $20 par value preferred stock for $25 per share. December 1 Declares a cash dividend of $3 per share to all stockholders of record (both common and preferred) on December 15. December 15 Northwest Clothing Supply has fixed the Record Date for both common and preferred shares as December 15. December 31 Pays the cash dividend declared on December 1. Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:

1. Jan 1

Dr Cash $60,000

(4,000×16)

Cr Common Stock $60,000

2. March 15

Dr Cash $20,000

Cr Preferred Stock $16,000

Cr Additional PIC $4,000

3.

December 15

Dr Dividends $4,800

Cr Dividends Payable $4,800

4. December 15

No entry

5. December 31

Dr Dividends Payable $4,800

Cr Cash $4,800

Explanation:

1.

Jan 1

Dr Cash $60,000

(4,000×16)

Cr Common Stock $60,000

2. March 15

Dr Cash $20,000

($800×25)

Cr Preferred Stock $16,000

($800×20)

Cr Additional PIC $4,000

3.

December 15

Dr Dividends $4,800

($4,000 shares+$800 Shares)

Cr Dividends Payable $4,800

4. December 15

No entry

5. December 31

Dr Dividends Payable $4,800

Cr Cash $4,800