Question

In: Accounting

(I WILL LEAVE YOU A GREAT REVIEW!) Daisy D. Corporation has the following stockholders' equity on...

(I WILL LEAVE YOU A GREAT REVIEW!) Daisy D. Corporation has the following stockholders' equity on December 10, 2020:

Common Stock ($15-par value, 300,000 shares authorized, 130,000 shares issued and outstanding $1,950,000
Additional Paid-In Capital in Excess of Par Value 1,890,000
Total Paid-in Capital $3,840,000
Retained Earnings 4,410,000
Total Stockholders' Equity $8,250,000

On December 10, the market price of Daisy D. Corporation's common stock was $102 per share.

Required:

Part A: Give the general journal entry(s) required (if any) on December 10, 18, and 31 to record the following transactions in Workpaper #4.

  1. On December 10, 2020, Daisy D. declared a $2 per share cash dividend, payable on December 31, to shareholders of record on December 18.
  2. On December 10, 2020, Daisy D. declared a 7% stock dividend, distributable on December 31 to shareholders of record on December 18.
  3. On December 10, 2020, Daisy D. declared a 200% stock dividend, distributable on December 31 to shareholders of record on December 18.
  4. On December 10, 2020, Daisy D. declared a 5 for 1 stock split effective December 31, 2020.

Part B: For each transaction in part A, indicate the balances of the stockholders' equity accounts and other stockholders' equity information on December 31, 2020, assuming no other stockholders' equity transactions occurred. Treat each case independently--compute the new balances of each case based on the Current Balances.

Current Balances

Trans. 1

Cash Dividend

Trans. 2

7% Stock Dividend

Trans. 3

200% Stock Dividend

Trans4.

5for1StockSplit
CommonStock 1,950,000
APIC in Excess of Par Value 1,890,000
Total Paid-in Capital 3,840,000
Retained Earnings 4,410,000
Total Stockholders' Equity 8,250,000
# of Shares Outstanding 130,000
Par Value per Share $15
Market Price per Share $102

Part C: If you are a shareholder in D. Daisy Corporation with 1,000 shares of stock, describe the effect that each transaction in Part A would have on you.

  1. $2 per share cash dividend
  2. 7% stock dividend
  3. 200% stock dividend
  4. 5 for 1 Stock Split.

Solutions

Expert Solution

Part A

Part A

.

.

.

Date

Accounts Title

Dr

Cr

10-Dec

Retained Earnings

$260000

Cash Dividend payable (130000*2)

$260000

(To record cash dividend declaration )

18-Dec

No entry required

31-Dec

Cash Dividend payable (130000 *2)

$260000

Cash

$260000

(To record payment of cash divided)

10-Dec

Retained Earnings (130000*7%*102)

$928200

Common Stock Dividend Distributable (130000*7%*15)

$136500

Additional Paid in capital excess of par value(928200-136500)

$791700

(To record stock divided distributable )

18-Dec

No entry required

31-Dec

Common Stock Dividend Distributable (130000*7%*15)

$136500

Common stock

$136500

(Stock dividend distributed )

10-Dec

Retained Earnings (130000 *2 *15)

$3900000

Common Stock Dividend Distributable

$3900000

(this is at par value)( to record 200% stock dividend )

18-Dec

No entry required

31-Dec

Common Stock Dividend Distributable

$3900000

Common stock

$3900000

(To record stock dividend distribution )
.

in case of 4:1 stock spilt – There is no journal entry,

.

.

Part B

.

.

Current bal

Tra. 1

Cash dividend

Transa.. 2

Stock dividend

Trans. 3

200% stock dividend

Trans. 4

Stock split

Common stock

$1950000

$1950000

$2086500

(1950000+

136500)

5850000

(1950000+

3900000)

$1950000

APIC in excess of par value

1890000

$1890000

2681700

(1890000+

791700)

1890000

$1890000

Total Paid in capital

$3840000

$3840000

4768200

$7740000

$3840000

Reatined Earnings

4410000

4150000

(4410000-260000)

3481800

(4410000-928200)

510000

(4410000-

3900000)

4410000

Total stockholder equity

$8250000

$7990000

$8250000

$8250000

$8250000

No. of shares outstanding

130000

130000

139100

(130000 + 7%)

260000

(130000+

200%)

650000

( 5 for 1, so

130000 * 5)

Par value per share

15

15

15

15

3

(15/5)

Marlet value per share

$102

$102

Decrease

Decrease

Decrease

.

Part C

.

a)

Will receive cash dividend of 1000*2

$2000

b)

Will receive stock of 1000*7%*102

$7140

c)

Will receive stock of (1000*2*15)

$30000

d)

the stock will be 2000 but total value remains same

ekkarill92 answered 2 years ago
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