Question

In: Accounting

Jungle Corporation's stockholder's equity section at December 31, 2014 appears below: Stockholders equity Paid in Capital...

Jungle Corporation's stockholder's equity section at December 31, 2014 appears below:

Stockholders equity

Paid in Capital

Common stock, $10 par, 60,000 outstanding $600,000

Paid in Capital in excess of par 150,000

Total paid in capital $750,000

Retained Earnings 150,000

Total Stockholder's Equity $900,000

On June 30, 2015, the board of directors of Kenner Corp declared a 15% stock dividend, payable on July 31, 2015, to stockholders of record on July 15, 2015. The fair value of Kenner Corp's stock on June 30, 2015 was $15.

On December 1, 2015 the board of directors declared a 2 for 1 stock split effective December 15, 2015. Jungle Corp's stock was selling for $20 on December 1, 2015, before the stock split was declared. Par value of the stock was adjusted. Net income for 2015 was $190,000 and there were no cash dividends declared.

Instructions

(a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split. Show all calculations.

(b) Fill in the amount that would appear in the stockholder's equity section for Jungle Corp at December 31, 2015, for the following items: (Show all calculations)

1.Common Stock

2.Number of shares outstanding

3.Par value per share

4.Paid-in capital in excess of par

5.Retained Earnings

6.Total Stockholder's Equity

Expert Solution

a)

Date	Account title	Debit	credit
June 30 2015	Stock Dividend (9000*15)	135000
	Common stock distributable (9000*10)		90000
	Paid in Capital in excess of par		45000

July 15 2015	No entry is required on record date

July 31,2015	Common stock distributable	90000
	common stock		90000

December 1 2015	No entry for stock split is required .The only effect it has is increasing the number of shares to 138000 shares with par value to $5 per share such that overall equity remains the same

December 31 2015	Income summary	190000
	Retained earning		190000
	[To close net income]

December 31 2015	Retained earning	135000
	Stock dividend		135000
	[To close stock dividend]

working :

a)Number of shares issued as stock dividend =current number of shares outstanding * % of stock dividend

=60000*15%

= 9000 shares

b)Total shares outstanding = 60000 +9000 = 69000 shares

shares after stock split = 69000*2/1 = 138000 shares

Par value per share after stock split = 10*1/2 =$ 5 per share

b)

	Balance as on December 31 2015
1.Common Stock	138000 shares *5 per share = 690000
2) Number of shares outstanding	138000 shares
3) .Par value per share	$5 per share
4) Paid-in capital in excess of par	150000 Beginning + 45000 = 195000
5)Retained earning	150000 Beginning +190000Net income -135000stock dividend = 205000
6)Total equity	1+4+5 1090000

ekkarill92 answered 1 year ago

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