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Selected dividend transactions, stock split Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows: Jan. 8. Split the common stock 2 for 1 and reduced the par from $80 to $40 per share. After the split, there were150,000 common shares outstanding. Apr. 30. Declared semiannual dividends of $0.75 on 18,000 shares of preferred stock and $0.28 on the common stock payable on July 1. July 1. Paid the cash dividends. Oct. 31. Declared semiannual dividends of $0.75 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $52. Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend. Journalize the transactions.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 13, Problem 13E
Textbook Problem
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Selected dividend transactions, stock split

Selected transactions completed by Canyon Ferry Boating Corporation during the current fiscal year are as follows:

Jan. 8. Split the common stock 2 for 1 and reduced the par from $80 to $40 per share. After the split, there were150,000 common shares outstanding.

Apr. 30. Declared semiannual dividends of $0.75 on 18,000 shares of preferred stock and $0.28 on the common stock payable on July 1.

July 1. Paid the cash dividends.

Oct. 31. Declared semiannual dividends of $0.75 on the preferred stock and $0.14 on the common stock (before the stock dividend). In addition, a 5% common stock dividend was declared on the common stock outstanding. The fair market value of the common stock is estimated at $52.

Dec. 31. Paid the cash dividends and issued the certificates for the common stock dividend.

Journalize the transactions.

To determine

Journalize the transactions.

Explanation of Solution

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend.

Cash dividends: The amount of cash provided by a corporation out of its distributable profits to its shareholders as a return for the amount invested by them is referred as cash dividends.

Stock Dividends: It refers to the payment of dividends by a company to its existing shareholders, in the form of additional shares rather than cash. Stock dividends are paid, when there is inadequate cash availability in the company.

Journalize the transactions for Corporation CF.

DateAccount Titles and ExplanationDebit ($)Credit ($)
January 8No entry is required  
 
April30Cash Dividends                                        (1)55,500 
       Cash Dividends Payable 55,500
  (To record the declaration of cash dividends)  
 
July 1Cash Dividends Payable                          (1)55,500 
       Cash  55,500
  (To record the payment of cash dividends)  
 
October31Cash Dividends                                        (2)34,500 
       Cash Dividends Payable 34,500
  (To record the declaration of cash dividends)  
 
October31Stock Dividends                                       (4)390,000 
  

    Common Stock Dividends Distributable                           

(5)

 300,000
  

    Paid-in Capital in excess of Stated 

    Value-Common stock                          (6)

 90,000
  (To record the declaration of stock dividends)  
 
December31Cash Dividends payable                          (2)34,500 
       Cash  34,500
  (To record the payment of cash dividends)  
 
December31Common Stock Dividends Distributable (5)300,000 
      Common Stock 300,000
  (To record the distribution of stock dividends)  

Table (1)

Working notes:

(1)

Compute the amount of total cash dividends declared on April 30.

Amount of total cash dividendsdeclared on April 30} =[Cash divided for preferrence shares +Cash divided for common shares +]=[(Number of preferrence shares×$0.75per share)+(Number of shares outstandingafter the the stock split×$0.28 per share)]=[(18,000 shares×$0.75)+(150,000×$0.28)]=$55,500

(2)

Compute the amount of total cash dividends declared on October 31.

Amount of total cash dividendsdeclared on October 31} =[Cash divided for preferrence shares +Cash divided for common shares +]=[(Number of preferrence shares×$0

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Chapter 13 Solutions

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