Question

On January 1, 2022, Marigold Corp. had these stockholders’ equity accounts.

Common Stock ($10 par value, 68,500 shares issued and outstanding)		$685,000
Paid-in Capital in Excess of Par Value		483,500
Retained Earnings		635,000

During the year, the following transactions occurred.

Jan.	15		Declared a $0.70 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 $13 per share.
May	15		Issued the shares for the stock dividend.
Dec.	1		Declared a $0.60 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 $357,000.

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

Answer 1

S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
1	Jan 15	Debit	Retained earning	47,950
		Credit	Cash Dividend payable		47,950
			(To record declaration of cash dividend at $.070 per share for 68,500 shares of record January 31)
Working	Cash dividend payable		= No of shares* cash dividend per share
			=68500*0.7
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
2	Feb 15	Debit	Cash Dividend payable	47,950
		Credit	Bank		47,950
			(To record payment of cash dividend of $.070 per share for 68,500 shares of record January 31)
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
3	April 15	Debit	Retained earning	89,050
		Credit	Paid in capital in excess of par value		20,550
		Credit	Stock dividend payable		68,500
			(To record declaration of 10% stock dividend to stockholder of record on April 30 and distributable on May 15 at the market value of shares on April 15)
Working	Stock dividend payable		=Common stock*10%
			=685,000*10%
Working	Paid in capital in excess of par value		No of shares* stock dividend percentage* excess of amount over the par value		20,550
			=685,00*10%*3
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
4	May 15	Debit	Stock dividend payable	68,500
		Credit	Common Stock		68,500
			(To record the issue of 6,850 no of common stock to complete the process of stock dividend at $ 10 per shares)
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
5	Dec 1	Debit	Retained earning	45,210
		Credit	Cash Dividend payable		45,210
			(To record declaration of cash dividend at $.060 per share for 75,350 shares of record December 15)
Working	Revised no of common stock post issue of stock dividend		=orininal no of shares+ stock divident shares
			=68500+6850
Working	Stock dividend payable		= No of shares* cash dividend per share
			=75,350*0.60
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
6	Dec 31	Debit	Net income	357,000
		Credit	Retained earning		357,000
			(To record the transfer of net income of 2022 to retained earning)
S No	Date	Debit/Credit	Particulars	Debit Amount ($)	Credit Amount ($)
7	Jan 10	Debit	Cash Dividend payable	45,210
		Credit	Bank		45,210
			(To record payment of cash dividend of $.070 per share for 68,500 shares of record December 15)