90.2K

Verified Solution

Link Copied!

QUESTION $2$

P$3$ Corp began operations on $1/1/20$x$1.$ The company's balance sheet, representing its financial position at the end of its first year of operation $($December $31,201)$ is depicted below as Column A$.$ Parts $1,2$ and $3$ are mutually exclusive events

PART $1$

Assuming that on December $1,20$x$1$ the company declared a cash dividend of $$7750$ payable to holders of the stock as of December $15,201.$ The cash dividend will be paid in December $30,20$x$1.$ Paying cash dudends

a$)$ Prepare all accounting journal entries for the entire dividend process.

b$)$ Based on the journal entries from a$,$ construct the new balance sheet to reflect the cash dividend $($Column B$).$

PART $2$

Assume that on December $1,20$x$1$ the company decides to give its investors a $15\%$ stock dividend, payable to holders of the stock as of December $15,201.$ The stock dividend was paid on December $30,201,$ when the company's stock had a market value of $$12$ per share.

c$)$ How many shares of stock must the company issue to investors?

stock dividends

d$)$ What is the dollar value of the stock dividend?

chapter

e$)$ Provide all journal entries for this transaction. Based on these journal entries, construct the new balance sheet to reflect the stock dividend $($Column C$).$

PART $3$

Assume that on December $30,20$x$1,$ when the company's stock had a market value of $$15$ per share, the company decides to purchase $125$ shares of its own stock.

f$)$ Provide all journal entries for this transaction.

g$)$ Based on the journal entries from part $f,$ construct the new balance sheet to reflect the treasury stock purchase.$($Column D$).{\displaystyle \underset{\phantom{}}{\overset{\phantom{}}{}}}V{\displaystyle \underset{\phantom{}}{\overset{\phantom{}}{}}}$

$\backslash$table$[[,,\backslash$table$[[$A$],[$tial$],[$sition$],[$E$)]],\backslash$table$[[$Col B$],[$FYE$],[$Cash$],[$Dividend$]],\backslash$table$[[$Col C$],[$FYE$],[$Stock$],[$Dividend$]],\backslash$table$[[$Col D$],[$FYE$],[$Treasury$],[$Stock$]]],[$Assets$,,,,,],[$Cash$,,55,000,,,],[$Liabilities$,,,,,],[$Notes Pay,,$10,000,,,],[$Shareholders Equity,,,,,$],[$Common Stock $($par value $=1),,2,000,,,],[$Additional Paid in capital,,$18,000,,,],[$Retained Earnings,,$25,000,,,],[$Treasury Stock,$$,,,,],[$Total Shareholders Equity,,$45,000,,,],[$Total Liab and Shareholders Equity,$$,55,000,,,]]$

treasury stock

Answer & Explanation Solved by verified expert

See Answer