Question
In: Accounting
Retained Earnings: Transactions and Statement The stockholders’ equity of Striker Corporation at January 1 appears below:...
Retained Earnings: Transactions and Statement
The stockholders’ equity of Striker Corporation at January 1 appears below:
| Common stock, $10 par value, 300,000 shares authorized; | |
| 105,000 shares issued and outstanding | $800,000 |
| Paid-in capital in excess of par value | 480,000 |
| Retained earnings | 305,000 |
During the year, the following transactions occurred:
| May | 12 | Declared a 9 percent stock dividend; market value of the common stock was $21 per share. |
| June | 6 | Issued the stock dividend declared on May 12. |
| Dec. | 5 | Declared a cash dividend of $1.00 per share. |
| 30 | Paid the cash dividend declared on December 5. |
Required
a. Prepare journal entries to record the foregoing transactions.
b. Prepare a statement of retained earnings. Net income for the year is $303,000.
Do not use negative signs with your answers.
Solutions
Expert Solution
| a.. Journal Entry | |||
| Date | Detail | Debit | Credit |
| 12-May | Retained Earning | $198,450.00 | |
| Common Stock Dividend Distributable ( 9450 Share @ $10) | $94,500.00 | ||
| Paid in Capital Excess Par Value ( 9450 Share @ $11) | $103,950.00 | ||
| ( Being 9% stock dividedend declared , @21 , 105000 Share *9%) | |||
| 06-Jun | |||
| Common Stock Dividend Distributable | $94,500.00 | ||
| Common Stock | $94,500.00 | ||
| Being Common Stock issued | |||
| 05-Dec | Retained Earning | $114,450.00 | |
| Dividend Payable | $114,450.00 | ||
| (Being Cash dividend declared (105000+9450)*$1/ Share) | |||
| 30-Dec | Dividend Payable | $114,450.00 | |
| Cash | $114,450.00 | ||
| ( Being Dividend Paid) | |||
| Statement of Retained Earning | |||
| Opening Balance of Retained Earning | $305,000.00 | ||
| + | Net Income for the Year | $303,000.00 | |
| - | Stock Dividedn declared | $198,450.00 | |
| - | Cash Dividend Declared & Paid | $114,450.00 | |
| Closing Balance of Retained Earning | $295,100.00 | ||
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