For each of the following scenarios, provide the general journal entries to record the necessary information. Use the following account titles for the transactions: Retained earnings, Dividends payable, Cash, Bonds payable, Interest expense, Interest payable, Paid-in capital, Common Stock, and Preferred Stock.
Scenario 1: On September 15, 20XX, the board of directors of Federated Corporation declared a cash dividend of $1 per share on its 800,000 outstanding shares of common stock. The dividend is payable on October 12 to the stockholders of record on September 30. Give the journal entries necessary on September 15, September 30, and October 12 20XX.
Scenario 2: North Lake Corporation had 200,000 shares of $10 par value common stock outstanding, on December 1, 20XX. The directors voted to split the stock on a 2-for-1 basis, issuing one new share to stockholders for every two shares presently owned. The estimated market value of the new shares will be $14.50.
Scenario 3: Crockett Corporation issued $200,000 of its 10 percent bonds payable on April 1, 2007. The bonds were issued at face value. Interest is payable semi-annually, on October and April 1. Give the journal entries to issue bonds and pay each of the first two interest payments to bondholders.
Scenario 4: Beasley Corporation issued 1,000 shares of its $10 par value common stock for cash at $11 per share.
Scenario 5: Young Corporation issued 2,000 shares of $25 par value common stock and 300 shares of 13%, $50 par value preferred stock for cash at par value.
1. When the dividend is declared, it is recorded as a liability on that date. On Sept. 30, only the names of shareholders are recorded who are to be paid the dividend and there is no journal entry. On Oct 12, cash is paid. The amount of dividend is 800,000X$1=$800,000 The journal entries are:
Sept. 15: Retained Earnings Dr 800,000
Dividends Payable Cr 800,000
Sept. 30 No entry
Oct. 12 Dividends Payable Dr 800,000
Cash Cr ...
This solution provides journal entries for recording a new issue of shares, a declared dividend, a bond issuance and interest payments.