In: Accounting
On December 31, 2020, Crane Corporation had the following shareholders’ equity accounts:
CRANE CORPORATION
Balance Sheet (partial)
December 31, 2020
Shareholders’ equity
Common shares (unlimited number of shares
authorized, 92,000 issued) $1,033,000
Retained earnings 520,000
Total shareholders’ equity
$1,553,000
During the year, the following transactions occurred:
Jan. 15 Declared a $1 per share cash dividend to
shareholders of record on January 31, payable February 15.
July 1 Announced a 2-for-1 stock split. The market price per share
on the date of the announcement was $18.
Dec. 15 Declared a 10% stock dividend to shareholders of record on
December 30, distributable on January 15. On December 15, the
market price of each share was $9; on December 30, $12; and on
January 15, $11.
31 Determined that profit before income tax for the year was
$456,000. The company has a 30% income tax rate.
part
(a)
Journalize the transactions and closing entries for 2021
Journal entries:
Date | Account title and explanation | Debit | Credit |
Jan.15 | Dividends [92,000 shares x $1] | $92,000 | |
Dividends payable-common | $92,000 | ||
[To record declaration of cash dividends] | |||
Jan.31 | No Entry on dividends record date | ||
Feb.15 | Dividends payable-common | $92,000 | |
Cash | $92,000 | ||
[To record payment of cash dividends] | |||
July 1 | No Entry for stock-split | ||
Dec.15 | Retained earnings [184,000 x 10%] x $9 | $165,600 | |
Common stock dividend distributable | $165,600 | ||
[To record declaration of stock dividends] | |||
Dec.30 | No Entry on dividends record date | ||
Dec.31 | Retained earnings | $92,000 | |
Dividends | $92,000 | ||
[To record closing entry for dividends] | |||
Dec.31 | Income summary [$456,000 x 0.70 after tax rate] | $319,200 | |
Retained earnings | $319,200 | ||
[To record closing entry for net income] |
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