Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows:

Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows:

Jan.
9. Split the common stock 3 for 1 and reduced the par from $75 to $25 per
share. After the split, there were 1,200,000 common shares outstanding.

Feb.
28. Purchased 40,000 shares of the corporation’s own common stock at $28,
recording the stock at cost.

May
1. Declared semiannual dividends of $0.80 on 75,000 shares of preferred stock
and $0.12 on the common stock to stockholders of record on June 1, payable on July 10.

July
10. Paid the cash dividends.

Sept.
7. Sold 30,000 shares of treasury stock at $34, receiving cash.

Oct.
1. Declared semiannual dividends of $0.80 on the preferred stock and $0.12 on
the common stock (before the stock dividend). In addition, a 2% common
stock dividend was declared on the common stock outstanding. The fair market
value of the common stock is estimated at $36.

Dec.
1. Paid the cash dividends and issued the certificates for the common stock dividend.

Instructions

Journalize the transactions.


Answers:

Jan. 9 No entry required. The stockholders’ ledger would be revised to
record the increased number of shares held by each stockholder and new par value.
Feb. 28 Treasury Stock (40,000 shares × $28) 1,120,000
Cash 1,120,000
May 1 Cash Dividends {(75,000 shares × $0.80) + [(1,200,000 shares – 199,200
40,000 shares) + $0.12]}
Cash Dividends Payable 199,200
July 10 Cash Dividends Payable 199,200
Cash 199,200
Sept. 7 Cash (30,000 shares × $34) 1,020,000
Treasury Stock (30,000 shares × $28) 840,000
Paid-In Capital from Sale of Treasury
Stock [30,000 shares × ($34 – $28)] 180,000
Oct. 1 Cash Dividends {(75,000 shares × $0.80) + [(1,200,000 shares – 202,800
10,000 shares) × $0.12]}
Cash Dividends Payable 202,800
1 Stock Dividends [(1,200,000 shares – 10,000 shares) × 2% × $36] 856,800
Stock Dividends Distributable (23,800 shares × $25) 595,000
Paid-In Capital in Excess of Par—
Common Stock [23,800 shares × ($36 – $25)] 261,800
Dec. 1 Cash Dividends Payable 202,800
Cash 202,800
1 Stock Dividends Distributable 595,000
Common Stock 595,000