Problem 18-8

During its first year of operations, Cupola Fan Corporation issued 30,000
of $1 par Class B shares for $385,000 on June 30, 2013. Share issue
costs were $1,500. One year from the issue date (July 1, 2014), the
corporation retired 10% of the shares for $39,500.
Part 1: Prepare the journal entry to record the issuance of the shares.
shares
6/30/13 Cash 385,000
Common stock (30,000 x $1) 30,000
Paid-in capital-excess of par (plug) 355,000
Paid-in capital-excess of par 1,500
Cash 1,500
(stock issue costs)

©Dr. Chula King

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Problem 18-8 (continued)

Part 2: Prepare the journal entry to record the declaration of a $2 per
share dividend on December 1, 2013.
12/1/13 Retained earnings (30,000 x $2) 60,000
Dividend payable 60,000
Part 3: Prepare the journal entry to record the payment of the dividend
on December 31, 2013.
12/31/13 Dividend payable 60,000
Cash 60,000
Part 4: Prepare the journal entry to record the retirement of the shares.
7/1/14 Common stock [(10% x 30,000) x $1] 3,000
Paid-in capital-excess of par* 35,350
Retained earnings (plug) 1,150
Cash (given) 39,500
*(10% x $353,500)
©Dr. Chula King
All Rights Reserved