Journal entries to record issuance of stock, declaration of dividend and payment of dividend.
Common and preferred stock - issuance and dividends. Permabilt Corp. was incorporated on January 1, 2008, and issued the following stock for cash:
3.6 million shares of no-par common stock were authorized; 1,050,000 shares were issued on January 1, 2008, at$46 per share.
1,200, 000 shares of$100 par value, 10.5% cumulative, preferred stock were authorized, and 420,000 shares were issued on January 1, 2008, at$132 per share.
Net income for the years ended December 31, 2008, 2009, and 2010, was$15,750,000, and $22,350,000, and$26,100,000, respectively.
No dividends were declared or paid during 2008 and 2009.However, on December 17, 2010, the board of directors of Permabilt Corp. declared dividends of$37,200,000, payable on February 9, 2011, to holders of record as of January 4, 2011. Write journal entries to show the effect of
(a) The issuance of common stock and preferred stock on January 1, 2008.
(b) The declaration of dividends on December 17, 2010.
(c) The payment of dividends on February 9, 2011.