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Alert Companys shareholders equity prior to any of the following events is as follows: Preferred stock, 8%, $100 par $100,000 Common stock, $10 par 150,000
Alert Companys shareholders equity prior to any of the following events is as follows:
Preferred stock, 8%, $100 par | $100,000 |
Common stock, $10 par | 150,000 |
Additional paid-in capital on preferred stock | 16,000 |
Additional paid-in capital on common stock | 220,000 |
Retained earnings | 264,000 |
$750,000 |
The company is considering the following alternative items:
1. | An 8% stock dividend on the common stock when it is selling for $30 per share. |
2. | A 30% stock dividend on the common stock when it is selling for $32 per share. |
3. | A special stock dividend to common shareholders consisting of 1 share of preferred stock for every 100 shares of common stock. The preferred stock and common stock are selling for $123 and $31 per share, respectively. |
4. | A 2-for-1 stock split on the common stock, reducing the par value to $5 per share (assume the same date for declaration and issuance). The market price is $30 per share on the common stock. Assume a 2-for-1 stock split on the common stock, reducing the par value to $5 per share (assume the same date for declaration and issuance). The market price is $30 per share on the common stock. What disclosure is required? |
5. | A property dividend to common shareholders consisting of 100 bonds issued by West Company. These bonds are carried on the Alert Company books as an available-for-sale investment at a fair value of $48,000 (which is also its cost); it has a current value of $54,000. Assume a property dividend to common shareholders consisting of 1,000 shares of West Company common stock. |
6. | A cash dividend, consisting of a normal dividend and a liquidating dividend, on both the preferred and the common stock. The 10% preferred dividend includes a 2% liquidating dividend, and the $2.30 per share common dividend includes a $0.30 per share liquidating dividend (separate liquidating dividend contra accounts should be used). Assume a cash dividend, consisting of a normal dividend and a liquidating dividend, on both the preferred and the common stock. The 10% preferred dividend includes a 2% liquidating dividend, and the $2.30 per share common dividend includes a $0.30 per share liquidating dividend (separate liquidating dividend contra accounts should be used). |
Required:
For each of the preceding alternative items: | |
1. | Record (a) the journal entry at the date of declaration and (b) the journal entry at the date of issuance. |
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