Question

On January 1, 2014, Geffrey Corporation had the following stockholders’ equity accounts. Common Stock ($24 par value, 70,000 shares issued and outstanding) $1,680,000 Paid-in Capital in Excess of Par—Common Stock 193,600 Retained Earnings 636,900 During the year, the following transactions occurred. Feb. 1 Declared a $3 cash dividend per share to stockholders of record on February 15, payable March 1. Mar. 1 Paid the dividend declared in February. Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $38. July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $15 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2015. 31 Determined that net income for the year was $348,000.

Answer 1

Date	Account	Debit	Credit
1-Feb-14	Cash dividends (70000*3)	210000
	To Dividends Payable		210000
1-Mar	Dividends Payable	210000
	To Cash		210000
1-Apr	No Entry for stock Split
	Number of shares increase (70000*2) = 140000
1-Jul	Stock Dividends	315000
	To Common Stock Dividends Distributable		210000
	To Paid on Capital In Excess of Par Value		105000
	(140000*15%)*15
31-Jul	Common Stock Dividends Distributable	210000
	To Common Stock		210000
1-Dec	Retained Earnings	80500
	To Dividend Payable		80500
	(140000+21000)*0.50
31-Dec	Income Summary	$348,000
	To Retained Earnings		$348,000

Common Stock
		Bal	$1,680,000
		31-Jul	$210,000
		Bal	$1,890,000
Paid in Capital in Excess of Par - Common Stock
		Bal	$193,600
		1-Jul	$105,000
		Bal	$298,600
Retained Earnings
1-Dec	$80,500	Bal	$636,900
31-Dec	$210,000	31-Dec	$348,000
31-Dec	$315,000
		Bal	$379,400
Cash Dividend
1-Feb	$210,000
		Retained Earnings	210000
	$210,000		$210,000
Dividend Payable
1-Feb	$210,000	1-Feb	$210,000
		1-Dec	80500
Bal	$80,500
	$290,500		$290,500
Common Stock Dividends Distributable
31-Jul	$210,000	Bal	$210,000
	$210,000		$210,000
Stock Dividend
1-Jul	315000
		Retained Earnings	315000
	315000		315000
Stockholders Equity
Common Stock			$1,890,000
Paid in Capital in Excess of Par Value			$298,600
Retained Earnings		$636,900
Add : Net Income		$348,000
Less : Dividend		$605,500	$379,400
Stockholders Equity			$2,568,000