ACCT 2001 Study Guide - Quiz Guide: Dividend

Multiple Stock Purchases—Journal Entries

Peck Company purchased Sanno Company common stock in a series ofopen-market cashpurchases from 2009 through 2011 as follows:

Date: Shares Acquired: Cost

Jan 1 , 2009 1800 46,000

Jan 1, 2010 4500 95,000

Jan 1 , 2011 9900 262,350

Sanno Company had 18,000 shares of 20 par value common stockoutstanding during the entire period. Retained earnings balancesfor Sanno Company on relevant dates were

Jan 1 2009 $20,000

Jan 1, 2010 (30,000)

Jan 1, 2011 85,000

Dec 31, 2011 170,000

Dividends in the amount of $50,000 were distributed by SannoCompany only in 2011. Any difference between implied and bookvalues assigned to good will. Peck company uses the cost method toaccount for its investment in Sanno Company,

Required:

A. Prepare journal entries that Peck company would record on itsbooks during 2011 to account for its investment in SannoCompany.

B. Prepare the workpaper elimiating entries necessary to preparea consildatted statement workpaper on Dec 31, 2011

APPLY THE CONCEPTS: Calculate the common and preferred dividendsPacioli Corporation has been incorporated for 30 years. Its currentpaid-in capital is shown to the right. Pacioli has been expandingits operations; its board of directors declared a small dividend of$2,000 in 2009 and no dividend in 2010. The expansion was asuccess, and profits have increased. On December 3, 2011, the boardof directors declared a dividend of $316,500 to stockholders onrecord at December 22, 2011, to be paid on December 29, 2011.Paid-in capital for Pacioli Corporation: Preferred stock, $10 par,5%, 12,000 shares authorized, 7,000 shares issued and outstanding$70,000 Common stock, $3 par, 200,000 shares authorized, 150,000shares issued, 140,000 shares outstanding 450,000 Additionalpaid-in capital—preferred stock 49,000 Additional paid-incapital—common stock 168,000 Total paid-in capital $737,000Determine the annual preferred dividend, assuming the number ofshares of preferred stock issued and outstanding has not changedfor the past three years: $? x ?% x? shares = $? How much dividendis in arrears for 2009? $? How much dividend is in arrears for2010? $? Use the information in the above table and calculated tothe above to complete the table below to illustrate thedistribution of the 2011 dividend. Total 2011 dividend declared $?2009 Dividends in arrears for 2009 $? 2010 Dividends in arrearsfor 2010 $? 2011 Current dividend $ ?Total preferred dividends $Dividends to common stockholders $ After you have determined thedividends available to the common stockholders, calculate thedividend per share to be paid to each common stockholder. Ifrequired, round the per share amount to the nearest cent. $ = $ pershare shares Show All Feedback Hide APPLY THE CONCEPTS: Prepare thejournal entries for Pacioli’s dividend> Pacioli uses temporaryaccounts to record dividends and closes those accounts to RetainedEarnings at the end of the period. Use the selection lists to theleft of the journal to illustrate the effect on the accountingequation. If you are not sure about the account titles, refer tothe chart of accounts below the last journal entry. Prepare thejournal entry for preferred dividends required on the declarationdate. GENERAL JOURNAL page DATE DESCRIPTION DOC. NO. POST. REF.DEBIT CREDIT 1 Dec. 3 1 2 2

Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2015, 320 shares of preferred stock and 4,200 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2015: RECORD EACH OF THESE TRANSACTIONS

March 1 Issues 1,300 shares of common stock for $44 per share.

May 15 Repurchases 420 shares of treasury stock for $37 per share.

July 10 Reissues 220 shares of treasury stock purchased on May 15 for $42 per share.

October 15 Issues 220 shares of preferred stock for $47 per share.

December 1 Declares a cash dividend on both common and preferred stock of $0.70 per share to all stockholders of record on December 15. (Hint: Dividends are not paid on treasury stock.)

December 31 Pays the cash dividends declared on December 1.

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2015: Preferred Stock, $320; Common Stock, $42; Additional Paid-in Capital, $77,000; and Retained Earnings, $30,900. Net income for the year ended December 31, 2015, is $11,200.