Selected Transactions Completed By Primo Discount Cor 124397

Selected Transactions Completed By Primo Discount Corporation During T

Selected transactions completed by Primo Discount Corporation during the current fiscal year are as follows: Jan. 9 Split the common stock The stock outstanding when a corporation has issued only one class of stock. 3 for 1 and reduced the par A dollar amount assigned to each share of stock. from $75 to $25 per share. After the split, there were 1,200,000 common shares outstanding. Feb. 28 Purchased 40,000 shares of the corporation’s own common stock at $28, recording the stock Shares of ownership of a corporation. at cost. May 1 Declared semiannual dividends Distribution of a corporation’s earnings to stockholders. of $0.80 on 75,000 shares of preferred stock A class of stock with preferential rights over common stock. and $0.12 on the common stock to stockholders The owners of a corporation. of record on June 1, payable on July 10. Jul. 10 Paid the cash dividends A cash distribution of earnings by a corporation to its shareholders. . Sep. 7 Sold 30,000 shares of treasury stock Stock that a corporation has once issued and then reacquires. at $34, receiving cash. Oct. 1 Declared semiannual dividends of $0.80 on the preferred stock and $0.12 on the common stock (before the stock dividend). In addition, a 2% common stock dividend A distribution of shares of stock to its stockholders. was declared on the common stock outstanding. The fair market value of the common stock is estimated at $36. Dec. 1 Paid the cash dividends and issued the certificates for the common stock dividend. Journalize the transactions. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

Paper For Above instruction

This paper analyzes the accounting transactions undertaken by Primo Discount Corporation within a specified fiscal year, focusing on stock splits, stock repurchases, dividends, treasury stock transactions, and stock dividends. Each transaction is examined in the context of its impact on the company's financial statements and shareholders' equity, illustrated through journal entries aligned with standard accounting principles.

The first notable transaction occurred on January 9, involving a 3-for-1 stock split, which effectively increased the number of outstanding shares and reduced the par value per share from $75 to $25. Stock splits are non-cash events that adjust the par value and share count, with no impact on total equity or assets but are important for investor perception and stock liquidity. Post-split, there were 1,200,000 shares outstanding, and the journal entry would involve a memorandum note since no monetary exchange occurs (accounting for the split itself).

On February 28, the firm purchased 40,000 shares of its own common stock at $28 per share, recorded as treasury stock. This transaction reduces cash (asset) and increases treasury stock (equity contra account), reflecting a buyback that may serve purposes such as supporting stock price or restructuring capital.

The declaration of dividends on May 1 for preferred and common stock, recorded on June 1, entailed a legal obligation to distribute earnings, with a payable date of July 10. The dividends decrease retained earnings and create a liability account—dividends payable—until paid. Preferred dividends are often cumulative with priority over common dividends.

In September, the sale of 30,000 treasury shares at $34 per share generated cash inflow, increasing cash assets and decreasing treasury stock. This transaction indicates the company reselling its stock, which can affect earnings per share and shareholders' equity.

In October, a semiannual dividend declaration again specified dividend amounts on preferred and common stock, along with a 2% stock dividend on the outstanding common shares, valued at $36 per share. Stock dividends transfer amounts from retained earnings to common stock and additional paid-in capital, reflecting profit distribution without cash outlay and increasing the number of outstanding shares.

End-of-year activities included the payment of cash dividends and issuance of certificates for the stock dividend on December 1, completing the dividend cycle. Proper journalizing of all these transactions ensures accurate financial reporting aligned with GAAP standards, highlighting the importance of meticulous record-keeping in corporate finance.

Understanding these transactions provides insight into how corporations manage their capital structure, shareholder relations, and compliance with reporting standards, which are crucial for investors, auditors, and management decision-making.

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