Question

On January 1, 2018, Cardi Corp. had the following balances (all balances are normal):

Accounts	Amount
Preferred Stock, ($100 par value, 4% noncumulative, 50,000 shares authorized, 6,000 shares issued and outstanding)	$600,000
Common Stock ($5 par value, 200,000 shares authorized, 100,000 shares issued and outstanding)	$500,000
Paid-in Capital in Excess of par, Common	200,000
Retained Earnings	900,000

The following events occurred during 2018:

1. On January 1, Cardi Corp. declared a 3% stock dividend on its common stock when the market value of the common stock was $11 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.
2. On February 15, Cardi Corp. reacquired 500 shares of common stock for $13 each.
3. On March 31, Cardi Corp. reissued 250 shares of treasury stock for $18 each.
4. On July 1, Cardi Corp. reissued 250 shares of treasury stock for $10 each.
5. On October 1, Cardi Corp. declared full year dividends for preferred stock and $2.00 cash dividends for outstanding shares and paid shareholders on October 15.
6.    On December 15, Cardi Corp. split common stock 2 shares for 1.
7. Net Income for 2018 was $300,000.

Requirements:

1. Prepare journal entries for the transactions listed above.
2. Prepare a Stockholders' section of a classified balance sheet as of December 31, 2018 (after taking into consideration your journal entries)

Answer 1

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Part 1
Date	Account	Debit	Credit
Jan 1	Retained Earning (100,000*3%*$11)	$                      33,000
	Common stock distributable (100,000*3%*$5)		$                      15,000
	Paid in capital, in excess of par, Common		$                      18,000
	(To record declaration of stock dividend)
Jan 31	Common stock distributable (100,000*3%*$5)	$                      15,000
	Common Stock		$                      15,000
	(To record issue of stock dividend)
Feb 13	Treasury Stock (500*$13)	$                        6,500
	Cash		$                        6,500
	(To record re acquisition of shares0
Mar 31	Cash (250*$18)	$                        4,500
	Treasury Stock (250*$13)		$                        3,250
	Paid in capital, in excess of par for Treasury		$                        1,250
	(To record re isusue of stock)
Jul 1	Cash (250*$10)	$                        2,500
	Paid in capital, in excess of par for Treasury	$                           750
	Treasury Stock (250*$13)		$                        3,250
	(To record re isusue of stock)
Oct 1	Retained Earning	$                    230,000
	Dividend Payable-Common (103,000*$2)		$                    206,000
	Dividend Payable-Preferred ($600,000*4%)		$                      24,000
	(To record declaration of dividneds)
	No of Common Shares
	(100,000+3,000 Stock Dividend)	103,000
Oct 15	Dividend Payable-Common (103,000*$2)	$                    206,000
	Dividend Payable-Preferred ($600,000*4%)	$                      24,000
	Cash		$                    230,000
	(To record dividend payment)
Dec 15	No Entry. No of shares doubled, Par value half
Dec 31	Income Summary	$                    300,000
	Retained Earning		$                    300,000
	(To record income to retained earning)
Part 2
	Preferred Stock, ($100 par value, 4% noncumulative, 50,000 shares authorized, 6,000 shares issued and outstanding)		$                    600,000
	Common Stock ($2.5 par value, 200,000 shares authorized, 200,600 shares issued and outstanding)		$                    515,000
			$                 1,115,000
	Paid-in Capital in Excess of par, Common		$                      18,000
	Paid-in Capital in Excess of par for Treasury		$                        2,500
	Total Paid in capital		$                 1,135,500
	Retained Earnings		$                    863,000
	Stockholder's Equity		$                 1,998,500