Some of the account balances of Mali Company at December

Some of the account balances of Mali Company at December 31, 20x0 are shown below:

6% Preferred Stock ($100 par, 2,000 shares authorized) ... $ 20,000

PCIEP, Preferred .................. 3,000

Common Stock ($10 par, 100,000 shares authorized) .... 500,000

PCIEP, Common ..................100,000

Retained Earnings ...................304,000

Treasury Stock-Preferred (50 shares at cost) ........ 5,500

Treasury Stock-Common (1,000 shares at cost) ...... 16,000

The price of the company’s common stock has been increasing steadily on the market; it was $21 on January 1, 20x1, advanced to $24 by July 1, and to $27 at the end of the year 20x1. The preferred stock was not openly traded, but was appraised at $120 per share during 20x1.

1) Give the proper journal entries for each of the following occurred in 20x1:

(a) The company declared a property dividend on April 1. Each common stockholder was to receive one share of Washington for every 10 shares outstanding. Mali had 8,000 shares of Washington (2% of total outstanding stock) which was purchased a few weeks ago for $68,400. The market value of Washington stock was $16 per share on April 1. Record appreciation only on the shares distributed.

(b) The company resold the 50 shares of preferred stock held in the treasury for $116 per share.

(c) On July 1, the company declared a 5% stock dividend to the common stockholders.

(d) On October 1, the company incurred a fire loss of $7,000 to its warehouse (ordinary loss).

(e) On October 15, the company declared a cash dividend of $100,000. Assume the preferred stock is non-cumulative.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...