Question

Dewey Corporation began operations on September 1, 2011. The corporation’s charter authorized 300,000 shares of $8 par value common stock. Dewey engaged in the following transactions during its first quarter:
Sept. 1 Issued 50,000 shares of common stock, $500,000.
1 Paid an attorney $32,000 to help start up and organize the corporation and obtain a corporate charter from the state.
Oct. 2 Issued 80,000 shares of common stock, $960,000.
15 Purchased 10,000 shares of common stock for $150,000.
Nov. 30 Declared a cash dividend of $0.40 per share to be paid on December 15 to stockholders of record on December 10.

REQUIRED
1. Record the above transactions in T accounts.
2. Prepare the stockholders’ equity section of Dewey’s balance sheet on November 30, 2011. Net income for the quarter was $80,000.
3. What effect, if any, will the cash dividend declaration on November 30 have on net income, retained earnings, and cash flows?



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  • CreatedSeptember 10, 2014
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