Chapter 13, Problem P13.40APGA

To determine

Classes of stocks:

These are two types of the share capital of a company. Common Stock represents the Common shares issued to the shareholders and preferred stock represents the preference shares issued. Preference shares are given preference in payment of dividends and repayment of capital. Common shareholders get the inbuilt right to vote in decisions of the company and a preference shareholders generally do not get this right but they may get voting rights with special provisions

Issuance of Stock:

A company issues common or preferred stock to collect the required amount of capital. Journal entry is made at the time of issuing the stock and receiving cash.

Cash dividend:

The Cash dividend is the amount of dividend paid to shareholders in cash. The Cash dividend is declared first and paid later. There are two journal entries made, one at the time of declaration of dividend and another at the time of payment.

1. Identification of the classes of stocks:

To identify:

The different class of stocks outstanding

To determine

2. Par value per share of preferred stock:

To identify:

The Par value per share of preferred stock of Voyage Comfort specialists

To determine

3. Journal entries for the issuance of stocks:

To determine:

The journal entry for issuance of stocks for cash

To determine

4. Declaration and payment of Cash dividends:

To determine:

The journal entries for declaration and payment of dividends