Question

During its first year of operations, Cupola Fan Corporation issued 43,000 of $1 par Class B shares for $450,000 on June 30, 2018. Share issue costs were $2,800. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $46,000. Required: 1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.20 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

cash                         447,200 debit

   common stock                43,000 credit

   additional paid-in          404,200 credit

-- to record issuance of stocks --

dividends       94,600 debit

        dividends payable   94,600 credit

-- to reocrd declaration of dividends --

dividends payable   94,600 debits

           cash                           94,600 credits

-- to record payment of cash dividends--

Explanation:

issuance of share:

43,000 x 1 =        43,000 common stock

cash procced     447,200 (450,000 - 2,800 flotation cost)

addition paid in 404,200 (difference between common stokc and procceds

dividends entries

dividends: 43,000 x 2.2 = 94,600 dividends

when declaringwe use a payable account

at payment date we write-off the payable and decrease cash.