Example 8

Cameron Corporation has the following capital structure at the beginning of the year:

5% Preferred stock, $50 par value, 20,000 shares authorized,

6,000 shares issued and outstanding $ 300,000

Common stock, $10 par value, 60,000 shares authorized,

40,000 shares issued and outstanding 400,000

Paid-in capital in excess of par 110,000

Retained earnings 440,000

Total stockholders' equity $1,250,000

Required:

Prepare the appropriate journal entry for each of the following transactions.

On June 1, Cameron declared cash dividends of $90,000.

On September 1, Cameron declared and distributed a 15% common stock dividend when the fair value of the stock was $25 per share.