Question

1. Sanchez Company issued 700,000 shares of common stock, $1 par, for $9 cash per share on December 31, 20X5. Prepare the journal entry.
2. Sanchez Company declared and paid a cash dividend of $.60 per share on December 31, 20X6. Prepare the journal entry. Assume only the 700,000 shares from requirement 1 are outstanding.
3. Sanchez Company had retained earnings of $7 million by December 31, 20X9. The market value of the common shares was $30 each. A common stock dividend of 2% was declared, and shares were issued on December 31, 20X9. Prior to the stock dividend 700,000 shares were outstanding. Prepare the journal entry. Also present a tabulation that compares the stockholders’ equity section before and after the declaration and issuance of the stock dividend. Also include at the bottom of the tabulation the effects on the overall market value of the stock, the total shares outstanding, and the number of shares and percentage of ownership of an individual owner who originally bought 10,000 shares.
4. What journal entries would be made by the investor who bought 10,000 original-issue shares of Sanchez Company common stock and held this investment throughout the time covered in requirements 1, 2, and 3?
5. Refer to requirement 4. Suppose the investor sold 2,000 shares for $33 each the day after receiving the stock dividend. Prepare the investor’s journal entry for the sale of the shares.



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  • CreatedFebruary 20, 2015
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