Question

On January 1, 2017, Getsi Corporation had the following stockholders’ equity accounts.

Common Stock ($10 par value, 100,000 shares issued and outstanding) $1,000,000 Paid-in Capital in Excess of Par—Common Stock 200,000 Retained Earnings 450,000

During the year, the following transactions occurred.

Jan. 15 Declared a $1 cash dividend per share to stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Mar. 1 Issued 10,000 shares of common stock at $12 per share.

Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the

market price of the stock was $13 per share. May 15 Issued the shares for the stock dividend. June 20 Purchased 2,000 shares of its $10 par common stock at $15 per share.

July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17. Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable Jan.5, 2018. Dec. 31 Determined that net income for the year was $200,000.

Instructions: Journalize the transactions and closing entries for net income and dividends. Note: Write clearly and use complete account names [do not abbreviate].

Answer 1

Required journal entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
Jan-15	Dividend Expense		100,000
	Dividend payable			100,000
	(For dividend declared)
	100,000*1
Feb-15	Dividend payable		100,000
	Cash			100,000
	(for dividend paid)
Mar-01	Cash (10,000*12)		120,000
	Common Stock (10,000*10)			100,000
	Paid in capital in excess of par-common stock			20,000
	(For common stock issued)
Apr-15	Retained Earnings (110,000*10%*13)		143,000
	Common Stock Dividend distributable (110,000*10%*10)			110,000
	Paid in capital in excess of par-common stock			33,000
	(for 10% stock declared)
May-15	Common Stock Dividend Distributable		110,000
	Common Stock			110,000
	(For stock issued)
Jun-20	Treasury Stock		30,000
	Cash			30,000
	(For treasury Stock purchased)
Jul-01	No journal entry required. Only in Note mentioned that stock is split by 2 for 1. So common stock will be 216,000 shares
Dec-01	Dividend Expense		108,000
	Dividend payable			108,000
	(For dividend declared)
	216,000*.5
Dec-31	Retained Earning		108,000
	Dividend Expense			108,000
	(For dividend closed to retained earnings)
Dec-31	Income summary		200,000
	Retained earnings			200,000
	(For Income closed to retained earning)