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For each scenario, provide the general journal entries

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For each of the following scenarios, provide the general journal entries to record the necessary information. You may use a word processing or electronic spreadsheet program to record your answers.

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.

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Solution Summary

The solution presents the journal entries together with explanations for each.

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Scenario 1:

September 15 entry

Debit Dividends $800,000
Credit Dividends payable $800,000
To record the declaration of dividends at $1 per share to be paid October 12.

Note: The account 'dividends' was not listed in the choices presented in the problem. It is an equity account with a contra balance. The entry is necessary because that is the day when a actual liability was ...

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