Question

On January 1, Sheridan Company had 97,500 shares of no-par common stock issued and outstanding. The stock has a stated value of $6 per share. During the year, the following occurred.
Apr. 1 Issued 23,000 additional shares of common stock for $17 per share.
June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30.
July 10 Paid the $1 cash dividend.
Dec. 1 Issued 1,500 additional shares of common stock for $19 per share.
15 Declared a cash dividend on outstanding shares of $2.90 per share to stockholders of record on December 31.

Required:
Prepare the entries to record these transactions.

Answer 1

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)