Question

The stockholders’ equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Preferred Stock (7%, $100 par noncumulative, 5,000 shares authorized) $300,000 Common Stock ($4 stated value, 300,000 shares authorized) 1,000,000 Paid-in Capital in Excess of Par Value—Preferred Stock 15,000 Paid-in Capital in Excess of Stated Value—Common Stock 480,000 Retained Earnings 688,000 Treasury Stock (5,000 common shares) 40,000 During 2017, the corporation had the following transactions and events pertaining to its stockholders’ equity. Feb. 1 Issued 5,000 shares of common stock for $30,000. Mar. 20 Purchased 1,000 additional shares of common treasury stock at $7 per share. Oct. 1 Declared a 7% cash dividend on preferred stock, payable November 1. Nov. 1 Paid the dividend declared on October 1. Dec. 1 Declared a $0.5 per share cash dividend to common stockholders of record on December 15, payable December 31, 2017. Dec. 31 Determined that net income for the year was $280,000. Paid the dividend declared on December 1.

Answer 1

Answer:

Cash   30,000

   Common stock   20,000

  Additional paid-in 10,000

Treasury Stock  7,000

   Cash                          7,000

dividends     21,000

     dividends payable      21,000

dividends payable  21,000

           cash                      21,000

dividends     124,500 debit

  dividends payable    124,500 credit

dividends payable 124,500 debit

       cash                        124,500 credit

Explanation:

Feb 1st

5,000 x $4 = 20,000

Cash proceeds 30,000

addtional : 10,000

March 20th

1,000 shares x $7 per share = 7,000

October 1st:

300,000 preferred stock x 7% = 21,000 dividends

As we aren't paying right away we have a liaiblity.

Once are payed we write-off and post the cash outlay

November 1st:

common stock outstanding:

250,000 + 5,000 new shares - 6,000 trasury stock = 249,000

dividends payable:

249,000 shares x $0.5 per share = $124,500

December 1st

we write off the payable and post the cash outlay