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2)HiTech Manufacturing Company has 500,000 shares of $1 par value capital stock outstanding on January 1
2)HiTech Manufacturing Company has 500,000 shares of $1 par value capital stock outstanding on January 1. The following equity transactions occurred during the current year: (35 points) June 1 Declared a cash dividend of $0.20 per share July 1 Paid the $0.20 cash dividend to stockholders Aug. 1 Declared a 10% stock dividend. Market price of stock was $15 per share Sept. 10 Issued shares resulting from 10% stock dividend declared on August 1 Show calculations and prepare journal entries to record June 1, July 1, Aug. 1 and Sept. 10 transactions Please write your journal entries in the tables. Do not write anything outside of the tables. a) June 1 Calculations: Date Debit Credit Db Cr b) July 1 Calculations: Date Debit Credit Db Cr c) Aug. 1 Calculations: Date Debit Credit Db Cr d) Sept. 10 Calculations: Date Debit Credit Db Cr e) Compute the number of shares of capital stock outstanding at year-end.
Expert Solution
Answers :-
| Qn No | Date | Accounts Title and explanations | Debit Amount | Credit Amount |
| a) | June - 1 | Dr, Retained Earnings(5,00,000 ×$0.20) | $1,00,000 | |
| Cr, Dividend Payable | $1,00,000 | |||
| (To record the Cash Divident Declared) | ||||
| b ) | July 1 | Dr, Dividend Payable(5,00,000 ×$0.20) | $1,00,000 | |
| Cr, Cash | $1,00,000 | |||
| (To record the distribution of cash dividend) | ||||
| c) | Aug - 1 | Dr, Retained Earnings(5,00,000×10%×$15) | $7,50,000 | |
| Cr,stock dividend distributable(5,00,000×10%×$1) | $50,000 | |||
| Cr, Paid in capital in excess of par-Common stock (5,00,000×10%×$14) | $7,00,000 | |||
| (To record the Common Cash Divident Declared) | ||||
| d ) | Sep - 10 | Dr, Common stock dividend distributable | $50,000 | |
| Cr, Common stock | $50,000 | |||
| (To record the Common stock Divident Declared) |
..
e ) Number of Shares of Capital on Year-end
| Begining Balance | 5,00,000 |
| Add :- Stock Dividend Issued | 50,000 |
| Number of Shares of Capital on Year-end | 5,50,000 |
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