During its first year of operations, Cupola Fan Corporation issued 43,000 of $1 par Class B shares for $450,000 on June 30, 2018. Share issue costs were $2,800. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $46,000. Required: 1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.20 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Question

Lila Jensen

Business

26 February, 11:05

During its first year of operations, Cupola Fan Corporation issued 43,000 of $1 par Class B shares for $450,000 on June 30, 2018. Share issue costs were $2,800. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $46,000. Required: 1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.20 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Angelique Payne · Answer 1

cash 447,200 debit

common stock 43,000 credit

additional paid-in 404,200 credit

- - to record issuance of stocks - -

dividends 94,600 debit

dividends payable 94,600 credit

- - to reocrd declaration of dividends - -

dividends payable 94,600 debits

cash 94,600 credits

- - to record payment of cash dividends--

Explanation:

issuance of share:

43,000 x 1 = 43,000 common stock

cash procced 447,200 (450,000 - 2,800 flotation cost)

addition paid in 404,200 (difference between common stokc and procceds

dividends entries

dividends: 43,000 x 2.2 = 94,600 dividends

when declaringwe use a payable account

at payment date we write-off the payable and decrease cash.