Answer:
Sheridan Company
Journal Entries:
Apr. 1: Debit Cash $391,000
Credit Common stock $138,000
Credit Additional Paid-in Capital $253,000
To record the issue of 23,000 additional shares for $17 per share.
June 15: Debit Retained Earnings $120,500
Credit Dividends Payable $120,500
To record the declaration of cash dividend of $1 per share (120,500 shares).
July 10: Debit Dividends Payable $120,500
Credit Cash $120,500
To record the payment of dividends.
Dec. 1: Debit Cash $28,500
Credit Common stock $9,000
Credit Additional Paid-in Capital $19,500
To record the issue of 1,500 shares for $19 per share.
Dec. 12: Debit Retained Earnings $353,800
Credit Dividends Payable $353,800
To record the declaration of $2.90 per share dividends to 122,000 shares
Explanation:
a) Data and Analysis:
Outstanding common stock = 97,500 shares
Stated value per share = $6
Apr. 1 Cash $391,000 Common stock $138,000 Additional Paid-in Capital $253,000, 23,000 additional shares for $17 per share.
June 15: Retained Earnings $120,500 Dividends Payable $120,500 (97,500 + 23,000)
July 10: Dividends Payable $120,500 Cash $120,500
Dec. 1: Cash $28,500 Common stock $9,000 Additional Paid-in Capital $19,500
Dec. 12: Retained Earnings $353,800 Dividends Payable $353,800 (122,000 at $2.90 per share, i.e. 120,500 + 1,500 shares)
