In: Accounting
This is the stockholders equity section of Leveon James and co. at December 31, 2018: | ||||||||
31-Dec-18 | 31-Dec-19 | |||||||
Common stock, $10 par value, 1,000,000 shares issued & outstanding | 10,000,000 | 10,000,000 | ||||||
Additional paid-in-capital Common stock | 3,000,000 | |||||||
Retained Earnings | 8,750,000 | |||||||
$21,750,000 | ||||||||
The following transactions occurred in 2019: | ||||||||
1-Feb | Declared a cash dividend of $.50 per share to common shareholders of record on February 15th | |||||||
payable on March 1st | ||||||||
1-Mar | Paid the dividend declared on February 1st | |||||||
1-Apr | Announced a 5 for 1 common stock split, the market price was $20 per share | |||||||
1-Jul | Declared a 7% common stock dividend, distributable July 31st, the market price was $22 per share | |||||||
31-Jul | Issued the shares for the stock dividend | |||||||
1-Dec | Declared a commn stock cash dividend of .25 per share of record on December 15th | |||||||
31-Dec | Net income for the year was $1,450,000 | |||||||
A. | Journalize the transactions. | |||||||
B. | Prepare the December 31, 2019 stockholders equity section above |
A.
Date | Account title and explanation | Debit | Credit |
Feb 1 | Cash dividends [1,000,000 x $0.50] | $500,000 | |
Dividends payable-Common | $500,000 | ||
[To record declaration of cash dividends] | |||
Mar 1 | Dividends payable-Common | $500,000 | |
Cash | $500,000 | ||
[To record payment of cash dividends] | |||
Apr 1 | No Entry | ||
July 1 | Stock dividends [350,000 x $22] | $7,700,000 | |
Common stock dividend payable [350,000 x $5] | $1,750,000 | ||
Additional paid in capital Common stock | $5,950,000 | ||
[To record declaration of stock dividends] | |||
July 31 | Common stock dividend payable | $1,750,000 | |
Common stock | $1,750,000 | ||
[To record distribution of stock dividends] | |||
Dec 1 | Cash dividends [5,350,000 x $0.25] | $1,337,500 | |
Dividends payable-Common | $1,337,500 | ||
[To record declaration of cash dividends] | |||
Dec 31 | Income summary | $1,450,000 | |
Retained earnings | $1,450,000 | ||
[To close net income] | |||
Retained earnings | $9,537,500 | ||
Cash dividends [500000+1337500] | $1,837,500 | ||
Stock dividends | $7,700,000 | ||
[To close dividends] |
B.
Leveon James | |
Balance sheet (Partial) | |
At December 31,2018 | |
Stockholders' Equity: | |
Paid-in capital: | |
Common stock [5,350,000 x $5 par] | $26,750,000 |
Additional paid in capital Common stock [3,000,000 + 5,950,000] | $8,950,000 |
Total paid in capital | $35,700,000 |
Retained earnings [8750000+1450000-9537500] | $662,500 |
Total stockholders' equity | $36,362,500 |
Calculations:
Common shares | Par | |
Beginning | 1,000,000 | $10 |
After stock split [1,000,000 x 5] | 5,000,000 | $5 |
Stock dividend [5,000,000 x 7 %] | 350,000 | $5 |
After stock dividends | 5,350,000 | $5 |