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Entries for Stock Dividends Senior Life Co. is an HMO for businesses in the Portland area....

Entries for Stock Dividends

Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (320,000 shares authorized; 3,000 shares issued), $50 par, $150,000; Paid-In Capital in excess of par— common stock, $30,000; and Retained earnings, $1,500,000. The board of directors declared a 2% stock dividend when the market price of the stock was $69 a share. Senior Life Co. reported no income or loss for the current year.

If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown.

a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

a2. Journalize the entry to record the issuance of the stock certificates.

b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital $
Total retained earnings $
Total stockholders' equity $

c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital $
Total retained earnings $
Total stockholders' equity $

Solutions

Expert Solution

a1.

Accounts and Explanations Debit Credit
Retained Earnings [ 3,000 * 2% * $ 69 ] $      4,140.00
To Common Stock Dividend Distributable [ 3,000 * 2% * $ 50 ] $      3,000.00
To Paid-in Capital in Excess of Par [ 3,000 * 2% * $ 19 ] $      1,140.00
(Being Stock Dividend declared)

a2.

Common Stock Dividend Distributable $      3,000.00
To Common Stock $      3,000.00
(Being issuance of Stock certificates)
b c
Particular Before Stock Dividend After Stock Dividend
Common Stock $                     150,000.00 $                  153,000.00
Paid-in-Capital in excess of par $                       30,000.00 $                    31,140.00
1) Total Paid-in Capital $                     180,000.00 $                  184,140.00
2) Retained Earnings $                 1,500,000.00 $              1,495,860.00
3) Total Stockholders' Equity $                 1,680,000.00 $              1,680,000.00

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