Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockholders’ equity accounts. Common Stock...

Problem 14-1A

On January 1, 2017, Geffrey Corporation had the following stockholders’ equity accounts.

Common Stock ($22 par value, 54,000 shares issued and outstanding)		$1,188,000
Paid-in Capital in Excess of Par—Common Stock		199,000
Retained Earnings		626,000

During the year, the following transactions occurred.

Feb. 1		Declared a $3 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1		Paid the dividend declared in February.
Apr. 1		Announced a 2-for-1 stock split. Prior to the split, the market price per share was $35.
July 1		Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $15 per share.
31		Issued the shares for the stock dividend.
Dec. 1		Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2018.
31		Determined that net income for the year was $321,500.

1. Journalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

2.Enter the beginning balances, and post the entries to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed.) (Post entries in the order of journal entries presented in the previous part.)

3.Prepare a stockholders’ equity section at December 31

Solutions

Expert Solution

Answer :

Feb. 1: Cash Dividends =54,000 shares x $3=$162,000

April 1: No journal entries is made on the Stock split;

2-for-1 Stock split means 54,000 shares increased by 54,000 x 2=108,000 shares ; The par value of shares will be =$22/2=$11

July 1: Stock dividend=10% x 108,000 x $15=$162,000

Common Stock Dividends Distribute =10% x 108,000 x $11=$118,800

Paid-in Capital in Excess of Par—Common Stock=$162,000-$118,800=$43,200

Dec. 1: Cash Dividends =108,000 shares x $0.40 x 110%=$47,520 (110% is Stock dividend of 10%; 100%+10%=110%)

ekkarill92 answered 6 months ago

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