A Corporation Has 200,000 Shares of $10 Par Value Common

question 155

Essay

A corporation has 200,000 shares of $10 par value common stock outstanding. The following selected transactions related to the company's stock took place during the current year:
$$\begin{array} { | l | l | } \hline \text { Apr. } 15 & \begin{array} { l } \text { Declared a 40\% stock dividend to stockholders of record on May } 1 , \text { to be } \\\text { issued May } 10 \text {. The current market valued is } \$ 15 \text { per common share. }\end{array} \\\hline \text { May 1 } & \text { Date of record. } \\\hline \text { May } 10 & \text { Issued the common stock dividend. } \\\hline\end{array}$$ Prepare the journal entries to record these transactions.

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Definitions:

Inflow of Cash

The total amount of money coming into a company, typically from operations, investments, and financing.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Issuance of Long-Term Debt

The process by which a company borrows money from financial institutions or through the sale of bonds, agreeing to repay the principal, along with interest, over a period longer than one year.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures, indicating the financial health and liquidity.