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20 August, 12:31

During its first year of operations, Cupola Fan Corporation issued 43,000 of $1 par Class B shares for $450,000 on June 30, 2018. Share issue costs were $2,800. One year from the issue date (July 1, 2019), the corporation retired 10% of the shares for $46,000. Required: 1. to 4. Prepare the journal entry to record the issuance of the shares, the declaration of a $2.20 per share dividend on December 1, 2018, the payment of the dividend on December 31, 2018 and the retirement of the shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 20 August, 15:17
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    cash 447,200 debit

    common stock 43,000 credit

    additional paid-in 404,200 credit

    - - to record issuance of stocks - -

    dividends 94,600 debit

    dividends payable 94,600 credit

    - - to reocrd declaration of dividends - -

    dividends payable 94,600 debits

    cash 94,600 credits

    - - to record payment of cash dividends--

    Explanation:

    issuance of share:

    43,000 x 1 = 43,000 common stock

    cash procced 447,200 (450,000 - 2,800 flotation cost)

    addition paid in 404,200 (difference between common stokc and procceds

    dividends entries

    dividends: 43,000 x 2.2 = 94,600 dividends

    when declaringwe use a payable account

    at payment date we write-off the payable and decrease cash.
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