To declare a Dividend payable in Treasury Stock and pass the balance of the net gain to Reserve Fund, what entry? To declare a Dividend equal to the Treasury Stock, which is $5000, on $25,000 capital, or a Dividend of 25% :— C. C. Dewstoe, 50 shares, or $5000, 25% Dividend..... $1250.00 L. M. Southern, 54% shares, or $5450, 25% Dividend, 1125.00 1362.50 1262.50 $5000.00 Since the shares of stock are $100 each, it is impossible to issue them to the stockholders for the full proportion of their respective shares. The stock is issued for half shares, however, in order to get as near the full amount as possible. C. C. Dewstoe's proportion is $1250, and he receives 12 shares. S. W. Burrows' proportion is $1125, and he receives 11 shares, balance $25.00. L. M. Southern's proportion is $1362.50, and he receives 13% shares, balance $12.50. W. H. Van Tine's proportion is $1262.50, and he receives 12% shares, balance $12,50, To issue the new certificates as above, it will be readily seen that Burrows, Southern and Van Tine have a credit combined amounting to $50, or one-half share, being too small an amount to issue to any one of them; hence it is agreed that the stock be issued as above proportioned, the half share to remain as Treasury Stock until some future time. What entry when the stock is issued? Dividend No. 1, 1894....... To Treasury Stock... $4950.00 $4950.00 Now, it is agreed by the stockholders that S. W. Burrows shall receive the half share of Treasury Stock. What entry? Dividend No. 1, 1894....... To Treasury Stock... ........ $50.00 $50.00 In the Stock Ledger Debit Treasury Stock and Credit the Stockholders for the new certificates. In adjusting the Dividend as above, it will be noticed that Burrows' interest in the half share is $25, Southern's interest is $12.50, and Van Tine's interest is $12.50. It is issued to Burrows as agreed, but is not paid for, and no more entries are necessary on the books. How shall he pay for it? Burrows' interest in the half share is $25; hence he pays the others for their interest, and takes the stock. Note. This is a very puzzling entry and should be thoroughly understood. Considerable trouble has arisen out of this very problem, simply because it was not disposed of correctly by the bookkeeper. Many similar entries occur that baffle the skill of the accountant; but we fail to see why it should be so, for this reason: Until this half share of Treasury Stock is issued the Dividend remains unpaid for that amount, and as soon as the half share is issued the Dividend is fully paid as declared, and is simply a matter of settlement between the stockholders for their share of it. If the company issued the stock each one's share calls for, it would be necessary to issue in denominations of one-eighth. Stock is seldom or never issued for less than one-half share, though it is sometimes issued in one-fourth shares. No. 265. A Joint Stock Company is incorporated to conduct a general store, with a Capital Stock of $80,000, 800 shares, par value $100. Six hundred shares are taken by the incorporators, they to pay $10 per share. The rema ning 200 shares are held for Working Capital. The incorporators pay $10 per share and receive full paid stock. What entry or entries? Ex. 266. They bought a block corner On.ario and Huron stree.s, for which they paid cash $2000 and stock $10,000 (100 shares). What entry? Ex. 267. A net gain of $5000 was realized for the year. entry? What entry? What Ex. 268. A Dividend of 5% was declared. Ex. 269. A Surplus of $1000 was created. What entry? Ex. 270. A mortgage of $4000 was placed on the above property to raise money to pay the Dividend. What entry? Ex. 271. John D. Carbaugh has invented a corn planter of great value, which he has patented. A Stock Company was incorporated to manufacture it, with a Capital Stock of $200,000, 2000 shares, par value $100. C.rbaugh is to receive 250 shares full paid stock for his Patent Right, which he deeds to the company. The incorporators subscribe as follows: C. W. Strickler, 100 shares; C. S. Overholt, 400 shares; J. H. Clark, 150 shares; R. E. Fulton, 100 shares; Jas. Neil, 500. The remaining shares are set apart as Working Capital. Give two entries to open the books, with full explanations. NOTE.-The Power of the States to Regulate Particular Classes of Business. The extent to which a State can by legislation regulate the business and affairs of an association, whether it be incorporated or not, necessarily depends largely upon the nature of the business in which the association is engaged. Legis. lative powers extend over all matters of public interest; but where the public are not interested, private rights cannot be interfered with. If a particular kind of business or employment is of such a character or of such magnitude that the public are directly interested in its proper management, it falls within the legislative duties of the government to regulate the same. And under these circumstances the Legisla ture cannot be ousted from its proper sphere of action by the fact that a number of individuals have agreed to form a co-partnership or corporation for the purpose of carrying on the business in question. Thus the public are obviously interested in a very high degree in the proper management and operation of railroad and insurance companies; and hence the Legislature may make rules and regulations for the proper management and operation of railroad and insurance business, etc., whether conducted by corporations or not. The power of legislative interference is much more limited in case of companies formed for the purpose of carrying on employments in which the public are less directly concerned, such as manufacturing, mining, or buying and selling. The constitutionality of the legislation generally depends upon the answer to the question: Was the legislation designed to accomplish some object of public interest? CHAPTER FIFTEEN. Street Railroad Consolidation. Ex. 272. The East Cleveland Railway Co. and the South Side Street Railway Co. have consolidated under the following conditions: The new company is to be called The Cleveland Electric Railway Co., with a Capital Stock of $2,500,000, consisting of 25,000 shares, par value $100. The old stock of both companies to be redeemed at par and new stock issued in its stead. The Assets and Liabilities of both companies to be assumed by the new corporation. Eighteen thousand shares are taken by the old stockholders and 7000 shares held by the Treasurer to be sold for Operating Capital. What are the entries? Statement and Condition of The East Cleveland Ry. Co. |