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On January 1, 2018, Marx Corporation, a publicly traded company, had these shareholders’ equity accounts: Common...

On January 1, 2018, Marx Corporation, a publicly traded company, had these shareholders’ equity accounts:

Common shares (unlimited number of shares authorized, 233,000 shares issued) $2,330,000
Retained earnings 1,125,000
Accumulated other comprehensive income 123,000


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.
Apr. 16 Declared a 10% stock dividend to shareholders of record on April 30, distributable May 15. On April 16, April 30, and May 15, the share prices were $16, $14.50, and $15, respectively.
Oct. 1 Effected a 2-for-1 stock split. On October 1, the share price was $18.
Dec. 31 Determined that net income for the year was $692,000.


Record the above transactions, including any required entries to close dividends and net income.

Solutions

Expert Solution

Journal entries
Date Account Titles and Explanation Debit Credit
Jan.15,2018 Retained Earnings $233,000.00
Dividend Payable $233,000.00
(to record declaration of dividend to common stockholders @ $1 per share)
Feb.15,2018 Dividend Payable $233,000.00
Cash $233,000.00
(to record payment of dividend declared)
Apr.16,2018 Retained Earnings $372,800.00
Stock Dividend Distributable $372,800.00
(to record declaration of 10% stock dividend at $16 per share market rate)
Apr.30,2018 Stock Dividend Distributable $372,800.00
Common stock $233,000.00
Additional Paid in Capital $139,800.00
(to record distribution of stock dividend)
Oct.1,2018 For stock split , no entry is required.
Dec.31,2018 Income summary $692,000.00
Retained Earnings $692,000.00
(to record transfer of net income to retained earnings)

ekkarill92 answered 1 year ago
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