issuance of common stock

							(Do these 3 Quick Study questions in a single excel doc)

QS 13-2
Issuance of common stock

Prepare the journal entry to record each separate transaction. (a) On March 1, DVD Co. issues 44,500
shares of $4 par value common stock for $255,000 cash. (b) On April 1, GT Co. issues no-par value
common stock for $50,000 cash. (c) On April 6, MTV issues 2,000 shares of $20 par value common stock
for $35,000 of inventory, $135,000 of machinery, and acceptance of a $84,000 note payable.

QS 13-4
Accounting for cash dividends

Prepare journal entries to record the following transactions for Skylar Corporation:
May 15 declared a $48,000 cash dividend payable to common stockholders.
July 31 paid the dividend declared on May 15.

QS 13-5
Accounting for small stock dividend

The stockholders’ equity section of Catalina Company’s balance sheet as of April 1 follows. On April 2,
Catalina declares and distributes a 10% stock dividend. The stock’s per share market value on April 2 is
$25. Prepare the stockholders’ equity section immediately after the stock dividend.

Common stock—$5 par value, 375,000 shares
Authorized, 150,000 shares issued and outstanding . . . . . . . . . . . $ 750,000
Contributed capital in excess of par value, common stock . . . . . . . 352,500
Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,102,500
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,735,500
(Do these 2 exercises in another excel doc)
Exercise 13-3
Recording stock issuances

Prepare journal entries to record the following four separate issuances of stock:
1. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for
their efforts, estimated to be worth $30,000. The stock has no stated value.
2. Two thousand shares of no-par common stock are issued to the corporation’s promoters in exchange for
their efforts, estimated to be worth $30,000. The stock has a $1 per share stated value.
3. Four thousand shares of $10 par value common stock are issued for $70,000 cash.
4. One thousand shares of $100 par value preferred stock are issued for $120,000 cash.

Exercise 13-7
Stock dividends and splits

On June 30, 2005, Scizzory Corporation’s common stock is priced at $31 per share before any stock
dividend or split, and the stockholders’ equity section of its balance sheet appears as follows:

Common stock—$10 par value, 60,000 shares
Authorized, 25,000 shares issued and outstanding . . . . . . . . . . . . $250,000
Contributed capital in excess of par value, common stock . . . . . . . 100,000
Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $680,000

1. Assume that the company declares and immediately distributes a 100% stock dividend. This event is
recorded by capitalizing retained earnings equal to the stock’s par value. Answer these questions about
stockholders’ equity as it exists after issuing the new shares:
a. What is the retained earnings balance?
b. What is the amount of total stockholders’ equity?
c. How many shares are outstanding?
2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1.
Answer these questions about stockholders’ equity as it exists after issuing the new shares:
a. What is the retained earnings balance?
b. What is the amount of total stockholders’ equity?
c. How many shares are outstanding?
3. Explain the difference, if any, to a stockholder from receiving new shares distributed under a large stock
dividend versus a stock split.