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On January 1, 2018, Gerlach Inc. had the following account balances in its shareholders' equity accounts....

On January 1, 2018, Gerlach Inc. had the following account balances in its shareholders' equity accounts. Common stock, $1 par, 248,000 shares issued 248,000 Paid-in capital - excess of par, common 496,000 Paid-in capital - excess of par, preferred 160,000 Preferred stock, $100 par, 16,000 shares outstanding 1,600,000 Retained earnings 3,200,000 Treasury stock, at cost, 4,800 shares 24,000 During 2018, Gerlach Inc. had several transactions relating to common stock. January 15: Declared a property dividend of 100,000 shares of Slowdown Company (book value $11.2 per share, fair value $9.60 per share). February 17: Distributed the property dividend. April 10: A 2-for-1 stock split was declared and distributed on outstanding common stock and effected in the form of a stock dividend. The Fair value of the stock was $4 on this date. Hint: Debit Retained earnings. July 18: Declared and distributed a 3% stock dividend on outstanding common stock; fair value per share, $5. December 1: Declared a 50 cents per share cash dividend on the outstanding common shares. December 20: Paid the cash dividend. Required: Record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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Answer:a) Journal Entries:

January 15, 2018   

Loss on investment [(100,000 - ($10 - $9)] 100,000

        To Investment in Slowdown Co.                    100,000

Retained earnings (100,000 x $9) 900,000

     To Property dividend payable                  900,000

February 17, 2018

Property dividend payable 900,000

    To Investment in Slowdown Co.        900,000

April 10, 2018

Retained earnings [(250,000 – 5,000) x $1] 245,000

       To Common stock                                                 245,000

July 18, 2018

Retained earnings [(3% x 490,000) x $5] 73,500

         To Common stock [(3% x 490,000) x $1]             14,700

         To Paid-in capital - excess of par                         58,800

December 1, 2018

Retained earnings (504,700 x $.50) 252,350

    To Cash dividends payable                        252,350

December 20, 2018

Cash dividends payable 252,350

        To Cash                          252,350

Answer:b)

ekkarill92 answered 1 year ago
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