Question

Retained Earnings Accounts and Statement

1. Prepare journal entries for the transactions.

If an amount box does not require an entry, leave it blank.

2. Post all entries affecting the retained earnings accounts to T accounts.

3. Prepare a statement of retained earnings for the year ended December 31, 20--.

On January 1, 20--, Glover Company's retained earnings accounts had the following balances:

Appropriated for land acquisition	$	63,000
Unappropriated retained earnings		950,000
	$	1,013,000

During the year ended December 31, 20--, Glover completed the following selected transactions:

Mar. 20	Declared a semiannual dividend of $0.8 per share on preferred stock and $0.25 per share on common stock to shareholders of record on April 10, payable on April 15. Currently, 10,000 shares of $50 par preferred stock and 100,000 shares of $5 par common stock are outstanding.
Apr. 15	Paid the cash dividends.
Oct. 10	Declared semiannual dividend of $0.8 per share on preferred stock and $0.25 per share on common stock to shareholders of record on November 5, payable on November 10.
Nov. 10	Paid the cash dividends.
17	Declared a 5% stock dividend to shareholders of record on December 8, distributable on December 15. Market value of the common stock was estimated at $15 per share.
Dec. 15	Issued certificates for common stock dividend.
31	Net income for 20-- was $296,000. Closed the income summary account.
31	Closed the cash dividends and stock dividends accounts.

X

1. Prepare journal entries for the transactions.

If an amount box does not require an entry, leave it blank.

GENERAL JOURNAL				PAGE 1
DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
20--
Mar. 20
Apr. 15
Oct. 10
Nov. 10
Nov. 17
Dec. 15
Dec. 31
Dec. 31
2. Post all entries affecting the retained earnings accounts to T accounts. Retained Earnings—Appropriated for Land Acquisition Bal. Retained Earnings—Unappropriated Bal. Bal. 3. Prepare a statement of retained earnings for the year ended December 31, 20--. Glover Company Statement of Retained Earnings For Year Ended December 31, 20-- Appropriated: $ Unappropriated: $ $ $ Total retained earnings, December 31 $

Answer 1

Journal Entries-

Date	Description	Post Ref	Debit	Credit
Mar 20	Retained Earning-Unappropriated [(25000+8000)]		33000
	To Cash Dividend Payable			33000
Apr 15	Cash Dividend Payable		33000
	To Cash			33000
Oct 10	Retained Earning-Unappropriated [(25000+8000)]		33000
	To Cash Dividend Payable			33000
Nov 10	Cash Dividend Payable		33000
	To Cash			33000
Nov 17	Retained Earning-Unappropriated [(5% of 100000)*15]		75000
	To Common Stock Dividend Distributable (5*5000)			25000
	To Paid in Capital in Excess of Par [(15-5)*5000]			50000
Dec 15	Common Stock Dividend Distributable (5*5000)		25000
	To Common Stock			25000

Retained Earning Accounts

Retained Earnings- Appropriated

Debit	Credit	Bal	Description
		$63,000	Opening Balance
0	0	0	Current period balance
		$63,000	Closing Balance

Retained Earnings- Unappropriated

Debit	Credit	Bal	Description	Date
		($950,000)	Opening Balance	01/01/18
$33000	0	($917,000)	Cash Dividend Payable	20/3/18
$33000	0	($884,000)	Cash Dividend Payable	10/10/18
$25000	0	($859,000)	Common Stock Dividend Distributable	17/11/18
$50000	0	($809,000)	Paid in Capital in Excess of Par	17/11/18
	($296,000)	($1,105,000)	Net Income During the	31/12/18
		($1,105,000)	Closing balance	31/12/18

Statement of Retained Earnings

Description	Amount (in $)
Opening Balance as on Jan 1,2018	1,013,000
Less :Dividend Paid in Cash and Stock	-141,000
Add : Net Income during 2018	296,000
Total Retained Earnings as on Dec 31,2018	1,168,000