In: Accounting
The equity sections for Upperchurch Group at the beginning of the year (January 1) and end of the year (December 31) follow.
Stockholders’ Equity (January 1)
Common stock—$10 par value, 130,000 shares authorized, 50,000 shares issued and outstanding $ 500,000 Paid-in capital in excess of par value, common stock 75,000 Retained earnings 410,000 Total stockholders’ equity $ 985,000 Stockholders’ Equity (December 31) Common stock—$10 par value, 130,000 shares authorized, 55,520 shares issued, 4,000 shares in treasury $ 555,200 Paid-in capital in excess of par value, common stock 141,240 Retained earnings ($80,000 restricted by treasury stock) 740,000 1,436,440 Less cost of treasury stock (80,000 ) Total stockholders’ equity $ 1,356,440 The following transactions and events affected its equity during the year. Jan. 5 Declared a $1.80 per share cash dividend, payable on January 10. Mar. 20 Purchased treasury stock for cash. Apr. 5 Declared a $1.80 per share cash dividend, payable on April 10. July 5 Declared a $1.80 per share cash dividend, payable on July 10. July 31 Declared a 12% stock dividend when the stock’s market value was $22 per share. Aug. 14 Issued the stock dividend that was declared on July 31. Oct. 5 Declared a $1.80 per share cash dividend, date of record October 10.
Record Journal Entries, Cash Dividends and Stock Dividends.
Date | General Journal | Debit | Credit |
Jan. 5 | Cash dividends (50000 x $1.80) | 90000 | |
Dividends payable | 90000 | ||
(To record declaration of cash dividends) | |||
Jan. 10 | Dividends payable | 90000 | |
Cash | 90000 | ||
(To record payment of cash dividends declared) | |||
Mar. 20 | Treasury stock | 80000 | |
Cash | 80000 | ||
(To record purchase of treasury stock) | |||
Apr. 5 | Cash dividends [(50000 - 4000) = 46000 x $1.80] | 82800 | |
Dividends payable | 82800 | ||
(To record declaration of cash dividends) | |||
Apr. 10 | Dividends payable | 82800 | |
Cash | 82800 | ||
(To record payment of cash dividends declared) | |||
Jul. 5 | Cash dividends (46000 x $1.80) | 82800 | |
Dividends payable | 82800 | ||
(To record declaration of cash dividends) | |||
Jul. 10 | Dividends payable | 82800 | |
Cash | 82800 | ||
(To record payment of cash dividends declared) | |||
Jul. 31 | Stock dividends [12% x (50000 - 4000) = 5520 x $22] | 121440 | |
Stock dividends distributable (5520 x $10) | 55200 | ||
Paid-in capital in excess of par value, common stock | 66240 | ||
(To record declaration of stock dividends) | |||
Aug. 14 | Stock dividends distributable | 55200 | |
Common stock | 55200 | ||
(To record distribution of stock dividends) | |||
Oct. 5 | Cash dividends [(46000 + 5520) = 51520 x $1.80] | 92736 | |
Dividends payable | 92736 | ||
(To record declaration of cash dividends) | |||
Oct. 10 | No journal entry required |