West Yellowstone Outfitters Corporation manufactures and distributes leisure clothing

West Yellowstone Outfitters Corporation manufactures and distributes leisure clothing. Selected transactions completed by West Yellowstone Outfitters during the current fiscal year are as follows:

Jan.
15. Split the common stock 4 for 1 and reduced the par from $120 to $30 per share. After the split, there were 800,000 common shares outstanding.

Mar.
1. Declared semiannual dividends of $0.25 on 100,000 shares of preferred stock and $0.07 on the 800,000 shares of $30 par common stock to stockholders of record on March 31, payable on April 30.

Apr.
30. Paid the cash dividends.

May
31. Purchased 60,000 shares of the corporation’s own common stock at $32, recording the stock at cost.

Aug.
17. Sold 40,000 shares of treasury stock at $38, receiving cash.

Sept.
1. Declared semiannual dividends of $0.25 on the preferred stock and $0.09 on the common stock (before the stock dividend). In addition, a 1% common stock dividend was declared on the common stock outstanding, to be capitalized at the fair market value of the common stock, which is estimated at $40.

Oct.
31. Paid the cash dividends and issued the certificates for the common stock dividend.

Instructions

Journalize the transactions.


Answers:

Jan. 15 No entry required. The stockholders’ ledger would be revised to record the increased number of shares held by each stockholder and new par value.
Mar. 1 Cash Dividends [(100,000 shares × $0.25) + (800,000 shares × $0.07)] 81,000
Cash Dividends Payable 81,000
Apr. 30 Cash Dividends Payable 81,000
Cash 81,000
May 31 Treasury Stock (60,000 shares × $32) 1,920,000
Cash 1,920,000
Aug. 17 Cash (40,000 shares × $38) 1,520,000
Treasury Stock (40,000 shares × $32) 1,280,000
Paid-In Capital from Sale of Treasury
Stock [40,000 shares × ($38 – $32)] 240,000
Sept. 1 Cash Dividends {(100,000 shares × $0.25) + 95,200
[(800,000 shares – 60,000 shares + 40,000 shares) × $0.09]}
Cash Dividends Payable 95,200
1 Stock Dividends [(800,000 shares – 60,000 shares + 40,000 shares) × 312,000
1% × $40]
Stock Dividends Distributable (7,800 shares × $30) 234,000
Paid-In Capital in Excess of Par—
Common Stock [7,800 shares × ($40 – $30)] 78,000
Oct. 31 Cash Dividends Payable 95,200
Cash 95,200
31 Stock Dividends Distributable 234,000
Common Stock 234,000