   Chapter 10, Problem 85PSB ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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# Common DividendsThompson Payroll Service began in 2019 with 1,500,000 authorized and 820,000 issued and outstanding S8 par common shares. During 2019, Thompson entered into the following transactions: Declared a S0.20 per-share cash dividend on March 24. Paid the S0.20 per-share dividend on April 6. Repurchased 13,000 common shares for the treasury at a cost of S12 each on May 9. Sold 2,500 unissued common shares for $15 per share on June 19. Declared a$0.40 per-share cash dividend on August 1. Paid the $0.40 per-share dividend on September 14. Declared and paid a 10% stock dividend on October 25 when the market price of the common stock was$15 per share. Declared a 50.45 per-share cash dividend on November 20. Paid the $0.45 per-share dividend on December 20. Required: Prepare journal entries for each of these transactions. (Note: Round to the nearest dollar.) What is the total dollar amount of dividends (cash and stock) for the year? CONCEPTUAL CONNECTION Determine the effect on total assets and total stockholders’ equity of these dividend transactions. To determine (a) Introduction: Dividend is the amount that is paid to the stockholders’ periodically as a return on their investment in the company. Dividend can be made in two forms i.e. Cash Dividend and Stock Dividend. To prepare: Journal Entries for the given transactions. Explanation Given: 1,500,000 shares were authorized and 820,000 were issued and outstanding$8 par common shares.

(a) No. of shares issued and outstanding = 820,000

Cash Dividend per share = $0.20 Total cash dividend = No. of shares issued and outstanding × Cash Dividend per share Total cash dividend = 820,000 ×$0.20

Total cash dividend = $164,000 (c) No. of shares repurchased = 13,000 Value of repurchase =$12 per share

Total Value of repurchase of shares = No. of shares repurchased ×Value of repurchase

Total Value of repurchase of shares = 13,000 × $12 Total Value of repurchase of shares =$156,000

(d) No. of shares issued = 2,500

Market value of shares issued = $15 Par Value =$8

Total Market value of shares issued = No. of shares issued × Market value of shares issued

Total Market value of shares issued = 2,500 × $15 Total Market value of shares issued =$37,500

Total par value of shares issued = No. of shares issued × Par value of shares

Total par value of shares issued = 2,500 × $8 Total par value of shares issued =$20,000

Additional Paid-in Capital = Total Market value of shares issued - Total par value of shares issued

Additional Paid-in Capital = $37,500 -$20,000

(e) No

To determine

(b)

Introduction:

Dividend is the amount that is paid to the stockholders’ periodically as a return on their investment in the company. Dividend can be made in two forms i.e. Cash Dividend and Stock Dividend.

To calculate:

Total cash and stock Dividend.

To determine

(c)

Introduction:

Dividend is the amount that is paid to the stockholders’ periodically as a return on their investment in the company. Dividend can be made in two forms i.e. Cash Dividend and Stock Dividend.

To calculate:

Total cash and stock Dividend.

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