Northwest Clothing Supply has the following transactions during the year related to stockholders' equity:

January 1 Issues 3,000 shares of no-par value common stock for $22 per share.
March 15 Issues 900 shares of $20 par value preferred stock for $23 per share.
December 1 Declares a cash dividend of $1 per share to all stockholders of record (both common and preferred) on December 15.
December 15 Northwest Clothing Supply has fixed the Record Date for both common and preferred shares as December 15.
December 31 Pays the cash dividend declared on December 1.

Required:
Record each of these transactions.

Answer:

January 1

Debit : Cash $66,000

Credit : Common Stock (3,000 x $22) $66,000

March 15

Debit : Cash $20,700

Credit : Preferred Stock ($20 x 900) $18,000

Credit : Preferred Stock Paid in excess of Par  ($3 x 900) $ $2,700

December 1

Debit : Dividends ($3000 + $900) $3,900

Credit : Shareholders for dividends $3,900

December 15

No Journal entry required here !

December 31

Debit : Shareholders for dividends $3,900

Credit : Cash $3,900

Explanation:

It is very important to identify the Par Value and No Par Value Stock issues.

Par Value Stock issues are sometimes issued above their Par so a Reserve - Paid In Excess of Par has to be created.

No Par Value issued are simply recorded at paid up or issue price.

Below are the simplified current and projected financial statements for Decker Enterprises. All of Decker's assets are operating assets. All of Decker's current liabilities are operating liabilities. Income statement Current Projected Sales na 1,500 Costs na 1,080 Profit before tax na 420 Taxes (25%) na 105 Net income na 315 Dividends na 95 Balance sheets Current Projected Current Projected Current assets 100 115 Current liabilities 70 81 Net fixed assets 1,200 1,440 Long-term debt 300 360 Common stock 500 500 Retained earnings 430 650 If Decker had a financing deficit, it could remedy the situation by a. borrowing from retained earnings b. borrowing on its line of credit c. paying down its long-term debt d. buying back common stock e. paying a special dividend

Restricted stock units (RSUs): Multiple Choice are a grant valued in terms of a set number of shares of company stock. are reported as a liability if payable in shares rather than cash. are recorded based on a value estimated by a restricted stock valuation model. represent shares issued at the date of grant that must be returned if the recipient fails to satisfy the vesting requirement.