Problem 4
Part A:
During 2015, the following transactions occurred at West MarIndustries.
March 20, 2015, the Company Purchased 12,000 shares of its owncommon stock at $20.00 per share.
October 5, 2015 the Company sold 3,000 of the shares it purchasedon March 20, 2015 for $25.00 per share.
Please prepare the journal entries for the abovetransactions.
Part B:
The Teflon Companyâs Board of Director declared a dividend on theCompanyâs 1,250,000 issued and outstanding common shares. The Boardof Directors authorized the dividend in accordance with thefollowing schedule.
December 10, 2015 declared a dividend of $.50 per share ofcommon stock
December 15, 2015 date of record for shareholders
December 28, 2015 payment date
Please prepare appropriate journal entries, if any, on dateslisted.
Part C:
The Maxim Corporation has 1,000,000 shares of common stockauthorized and 300,000 issued and outstanding. The par value of thestock is $1.00 per share. The Board of Directios has declared a 30%stock dividend. Please prepare the appropriate journal entry torecord stock dividend. The market value of the stock at the time ofthe stock dividend is $4.00 per share.
Problem 4
Part A:
During 2015, the following transactions occurred at West MarIndustries.
March 20, 2015, the Company Purchased 12,000 shares of its owncommon stock at $20.00 per share.
October 5, 2015 the Company sold 3,000 of the shares it purchasedon March 20, 2015 for $25.00 per share.
Please prepare the journal entries for the abovetransactions.
Part B:
The Teflon Companyâs Board of Director declared a dividend on theCompanyâs 1,250,000 issued and outstanding common shares. The Boardof Directors authorized the dividend in accordance with thefollowing schedule.
December 10, 2015 declared a dividend of $.50 per share ofcommon stock
December 15, 2015 date of record for shareholders
December 28, 2015 payment date
Please prepare appropriate journal entries, if any, on dateslisted.
Part C:
The Maxim Corporation has 1,000,000 shares of common stockauthorized and 300,000 issued and outstanding. The par value of thestock is $1.00 per share. The Board of Directios has declared a 30%stock dividend. Please prepare the appropriate journal entry torecord stock dividend. The market value of the stock at the time ofthe stock dividend is $4.00 per share.
Related questions
Prepare the journal entry to issue the stock below.
Authorized | Issued | Outstanding | |
Preferred Stock 8%, $100 | 1000 | 1000 | 1000 |
Common Stock, $1 Par | 100000 | 75000 | 75000 |
April 2015
The company purchased 5000 shares of its own shares for 10 onthe open market. Prepare this journal entry.
July 2015
The company declared a 10% stock dividend and the market pricewas $15.
September 2015
The company sells all its treasury stock for 12.50. Prepare thisjournal entry.
December 2015
Company declared a 50,000 dividend. Prepare the journal entry.How much per share?
| Green Corporation acquired45,000 shares of the outstanding common stock of Brown Company for$14.00 per share. | ||||
| The following events occurred during the year. | ||||
| 6/15/2015 | Brown declared and paid $0.75 per share cash dividend. | |||
| 12/10/2015 | Brown declared and paid $0.80 per share cash dividend. | |||
| 12/31/2015 | Brown reported net income for the year of $425,000.The market price of Brown common stock was $17 per share on thelast day of the year. | |||
| Instructions: | ||||
| (a) Prepare the journal entries for Green in 2015,assuming that the purchase of Brown stock constituted less than 10%of Brown's outstanding shares. | ||||
| Green treats this investment as available-for-salesecurities. | ||||
| (b) Prepare the journal entries for Green in 2015,assuming that the purchase of Brown stock constituted 32% ofBrown's outstanding shares. | ||||
| Solutions: | ||||
| Date | Account | Debit | Credit | |
| Less than 10% ownership: | ||||
| 1/1/2015 | Available-for-sale Securities | 630,000 | ||
| Cash | 630,000 | |||
| 45,000 sh x $14 | ||||
| 6/15/2015 | Cash | 33,750 | ||
| Dividend Revenue | 33,750 | |||
| 45,000 sh x $0.75 | ||||
| 12/10/2015 | Cash | 36,000 | ||
| Dividend Revenue | 36,000 | |||
| 45,000 sh x $0.80 | ||||
| 12/31/15 | Available-for-sale Securities | 135,000 | ||
| Unrealized Gain onAvailable-for-sale Securities | 135,000 | |||
| 45,000 x $17 =$765,000 - $630,000 =$135,000 | ||||
| 32% ownership: | ||||
| 1/1/2015 | Investment in Brown Company | 630,000 | ||
| Cash | 630,000 | |||
| 45,000 sh x $14 | ||||
| 6/15/2015 | Cash | 33,750 | ||
| Investment in BrownCompany | 33,750 | |||
| 45,000 sh x $0.75 | ||||
| 12/10/2015 | Cash | 36,000 | ||
| Investment in BrownCompany | 36,000 | |||
| 45,000 sh x $0.80 | ||||
| 12/31/2015 | Investment in Brown Company | 136,000 | ||
| Income from BrownCompany | 136,000 | |||
| $425,000 x 32% | ||||
