Buttercup Corp had the following shareholder’s equity at January 1, 2023. $5 Preferred Shares, $100 par value, cumulative and fully participating, 10,000 shares authorized, 8,000 issued and outstanding $800,000 Common Shares, 300,000 shares authorized, 200,000 issued and outstanding 620,000 Contributed surplus (common) 6,000 Retained Earnings 950,000 Required: Prepare journal entries for each of the following transactions. June 20 Accepted subscriptions for 4,000 common shares. Received a 40% down payment with the remainder due in two months. The subscription price was $10 per share. August 20 Received remaining payment on all but 500 of the subscribed and issued 4,500 common shares. The subscriber to the 500 has defaulted as he is not able to pay and the partial payment was forfeited and kept by Buttercup Corp. September 1 Sold 1,500 shares of preferred for cash. September 23 Purchased and retired 2,000 common shares at $3 per share. September 30 Declared a 5% common stock dividend. Market value is $6 b) Buttercup declared $300,000 of dividends on November 15. Dividends on the preferred shares are one year in arrears. Show the amount of dividends to be paid to the preferred shareholders and the common shareholders.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 5MC: Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par...

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Buttercup Corp had the following shareholder’s equity at January 1, 2023.

$5 Preferred Shares, $100 par value, cumulative and fully participating, 10,000 shares authorized, 8,000 issued and outstanding	$800,000
Common Shares, 300,000 shares authorized, 200,000 issued and outstanding	620,000
Contributed surplus (common)	6,000
Retained Earnings	950,000

Required:

Prepare journal entries for each of the following transactions.

June 20

Accepted subscriptions for 4,000 common shares. Received a 40% down payment with the remainder due in two months. The subscription price was $10 per share.

August 20

Received remaining payment on all but 500 of the subscribed and issued 4,500 common shares. The subscriber to the 500 has defaulted as he is not able to pay and the partial payment was forfeited and kept by Buttercup Corp.

September 1

Sold 1,500 shares of preferred for cash.

September 23

Purchased and retired 2,000 common shares at $3 per share.

September 30

Declared a 5% common stock dividend. Market value is $6

b) Buttercup declared $300,000 of dividends on November 15. Dividends on the preferred shares are one year in arrears. Show the amount of dividends to be paid to the preferred shareholders and the common shareholders.

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