Requirement 1. The Madison Company issued 1,000,000 shares of common stock, $3 par, for $45 cash per share on March 31, 20X1 Prepare the journal entry. Date Accounts Debit Credit Mar 31, 20X1 Requirement 2. Madison Company declared and paid a cash dividend of $2 per share on March 31, 20X2. Prepare the journal entry. Assume only the 1,000,000 shares from requirement 1 are outstanding Date Accounts Debit Credit Mar 31, 20X2 Requirement 3. Madison Company had retained earnings of $7 million by March 31, 20X5. The market value of the common shares was $45 each. A common stock dividend of 8% was declared; the shares were issued on March 31, 20X5. Prepare the journal entry. Also present a tabulation that compares the stockholders' equity section before and after the declaration and issuance of the stock dividend. Also include at the bottom of the tabulation the effects on the overall market value of the stock, the total shares outstanding, and the number of shares and percentage of ownership of an individual owner who originally bought 1,000 shares. Begin by preparing the journal entry. Date Accounts Debit Credit Mar 31, 20X5 Now present a tabulation that compares the stockholders' equity section before and after the declaration and issuance of the stock dividend. Also include at the bottom of the tabulation the effects on the overall market value of the stock, the total shares outstanding, and the number of shares and percentage of ownership of an individual owner who originally bought 1,000 shares. (Enter a "0" for any zero balances. Use a minus sign or parentheses for a decrease in value. Round the market value per share to the nearest cent, $X.XX, and the percentage ownership interest to the nearest one hundredth of a percent, X.XX%.) Begin by presenting a tabulation comparing the stockholders' equity section before and after the stock dividend. Next, show the overall market value of the stock as well at the market value per share of stock before and after the dividend. Then, show the effects on the number of shares and percentage of ownership of an individual owner who originally bought 1,000 shares. Before 8% stock dividend Shares Value Change Shares Value After 8% stock dividend Shares Value Common stock Additional paid-in capital Retained earnings Stockholders' equity Overall market value of stock Market value per share Individual shareholder: Assumed ownership of shares Percentage ownership interest % % Requirement 4. What journal entries would be made by the investor who bought 1,000 shares of the Madison common stock and held this investment throughout the time covered in requirements 1, 2, and 3? (If no entry is required, select "No journal entry required" on the first line of the Accounts column.) Begin by recording the entry, if any, made by the investor at the time of purchase on March 31, 20X1. Date Accounts Debit Credit Mar 31, 20X1 Record the journal entry made by the investor, if any, when Madison Company declared and paid a cash dividend of $2 per share on March 31, 20X2. Date Accounts Debit Credit Mar 31, 20X2 Now prepare the journal entry made by the investor, if any, when Madison Company declared a common stock dividend of 8% on March 31, 20X5. Date Accounts Debit Credit Mar 31, 20X5 Requirement 5. Refer to requirement 4. Suppose the investor sold 300 shares for $75 each the day after receiving the stock dividend. Prepare the investor's journal entry for the sale of the shares. (Round any interim calculations to the nearest cent, and your final answer to the nearest whole dollar.) Date Accounts Debit Credit Apr 1, 20X5
