Question

On January 1, 2022, Bridgeport Corp. had these stockholders’ equity accounts. Common Stock ($10 par value, 66,500 shares issued and outstanding) $665,000 Paid-in Capital in Excess of Par Value 481,500 Retained Earnings 615,000 During the year, the following transactions occurred. Jan. 15 Declared a $0.40 cash dividend per share to stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $16 per share. May 15 Issued the shares for the stock dividend. Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2023. Dec. 31 Determined that net income for the year was $353,000.

Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.

Enter the beginning balances and post the entries to the stockholders’ equity T-accounts.

Prepare the stockholders’ equity section of the balance sheet at December 31.

Calculate the payout ratio and return on common stockholders’ equity.

Answer 1

Answer-1-

Date	Account Titles & Explanation	Debit ($)	Credit ($)
Jan.15	Cash Dividend	26,600.00
	To Common Stock Dividend Distributable		26,600.00
	(Being Cash dividend declared on 66,550 Shares)
Feb.15	Common Stock Dividend Distributable	26,600.00
	To Cash		26,600.00
	(Being cash dividend paid)
Apr.15	Stock Dividend	106,400.00
	To Common Stock Dividend Distributable		106,400.00
	(Being Stock dividend declared @ 10%)
May.15	Common Stock Dividend Distributable	106,400.00
	To Common Stock		66,500.00
	To Paid-In Capital in Excess of Par Value		39,900.00
	(Being Stock Dividend distributed)
Dec.01	Cash Dividend	36,575.00
	To Common Stock Dividend Distributable		36,575.00
	(Being Cash dividend declared on 73,150 Shares)
Dec.31	Profit & Loss Account	353,000.00
	To Retained Earning		353,000.00
	(Being Net Income transferred to Retained Earnings)
Dec.31	Retained Earning	169,575.00
	To Cash Dividend		63,175.00
	To Stock Dividend		106,400.00
	(Being Cash & Stock Dividend transferred to Retained Earnings)

Common Stock
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
			01-Jan	Opening Balance	665,000.00
31-Dec	Closing Balance	731,500.00	May-15	Common Stock Dividend Distributable	66,500.00
31-Dec		731,500.00	31-Dec		731,500.00
Retained Earnings
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
31-Dec	Cash Dividend	63,175.00	01-Jan	Opening Balance	615,000.00
31-Dec	Stock Dividend	106,400.00	31-Dec	Profit & Loss	353,000.00
31-Dec	Closing Balance	798,425.00
31-Dec		968,000.00	31-Dec		968,000.00
Paid-In Capital In Excess of Par Value
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
			01-Jan	Opening Balance	481,500.00
			15-May	Common Stock Dividend Distributable	39,900.00
31-Dec	Closing Balance	521,400.00
31-Dec		521,400.00	31-Dec		521,400.00
Cash Dividend
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
15-Jan	Common Stock Dividend Distributable	26,600.00	31-Dec	Retained Earnings	63,175.00
01-Dec	Common Stock Dividend Distributable	36,575.00
31-Dec		63,175.00	31-Dec		63,175.00
Common Stock Dividend Distributable
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
15-Feb	Cash	26,600.00	15-Jan	Cash Dividend	26,600.00
15-May	Common Stock	66,500.00	15-Apr	Stock Dividend	106,400.00
15-May	Paid-In Capital in Excess of Par Value	39,900.00	01-Dec	Cash Dividend	36,675.00
31-Dec	Closing Balance	36,675.00
31-Dec		169,675.00	31-Dec		169,675.00
Stock Dividend
Date	Particulars	Amount ($)	Date	Particulars	Amount ($)
15-Apr	Common Stock Dividend Distributable	106,400.00	31-Dec	Retained Earnings	106,400.00
31-Dec		106,400.00	31-Dec		106,400.00

BRIDGEPORT CORP.
Partial Balance Sheet
As on 31 Decemeber 2020
Shareholders' Equity
Paid-In Capital
Capital Stock
Common Stock	$     731,500.00
Total Paid In Capital	731,500.00
Paid In Capital in Excess of Par Value-Common Stock	521,400.00
Total Additonal Paid-In Capital	521,400.00
Retained Earnings	798,425.00
Total Stockholders' Equity	$ 2,051,325.00

Payout Ratio = Total Dividend / Net Income * 100 = 169,575/353,000*100 = 48%

Return on Common Stockholders' Equity = Net Income / Average Stockholders' Equity

= 353,000/1,906,412 = 18.51%