At September 30, the end of Beijing Company’s third quarter, the following stockholders’ equity accounts are...

At September 30, the end of Beijing Company’s third quarter, the following stockholders’ equity accounts are reported. Common stock, $12 par value $ 360,000 Paid-in capital in excess of par value, common stock 100,000 Retained earnings 360,000 In the fourth quarter, the following entries related to its equity are recorded. Date General Journal Debit Credit Oct. 2 Retained Earnings 70,000 Common Dividend Payable 70,000 Oct. 25 Common Dividend Payable 70,000 Cash 70,000 Oct. 31 Retained Earnings 75,000 Common Stock Dividend Distributable 36,000 Paid-In Capital in Excess of Par Value, Common Stock 39,000 Nov. 5 Common Stock Dividend Distributable 36,000 Common Stock, $12 Par Value 36,000 Dec. 1 Memo—Change the title of the common stock account to reflect the new par value of $4. Dec. 31 Income Summary 290,000 Retained Earnings 290,000 Required: 2. Complete the following table showing the equity account balances at each indicated date.

At September 30, the end of Beijing Company’s third quarter, the following stockholders’ equity accounts are reported.


Common stock, $12 par value	$	360,000
Paid-in capital in excess of par value, common stock		100,000
Retained earnings		360,000

In the fourth quarter, the following entries related to its equity are recorded.

Date	General Journal	Debit	Credit
Oct. 2	Retained Earnings	70,000
	Common Dividend Payable		70,000

Oct. 25	Common Dividend Payable	70,000
	Cash		70,000

Oct. 31	Retained Earnings	75,000
	Common Stock Dividend Distributable		36,000
	Paid-In Capital in Excess of Par Value, Common Stock		39,000

Nov. 5	Common Stock Dividend Distributable	36,000
	Common Stock, $12 Par Value		36,000

Dec. 1	Memo—Change the title of the common stock
	account to reflect the new par value of $4.

Dec. 31	Income Summary	290,000
	Retained Earnings		290,000

Required:
2. Complete the following table showing the equity account balances at each indicated date.

	Sep. 30 Beg. Bal.	Oct. 2	Oct. 25	Oct. 31	Nov. 5	Dec. 1	Dec.31
Common stock	$360,000
Common stock dividend distributable
Paid-in capital in excess of par, common stock	$100,000
Retained earnings	$360,000
Total equity	$820,000	$0	$0	$0	$0	$0	$0

Solutions

Expert Solution

Solution.

	Sept. 30	Oct. 02	Oct.25	Oct.31	Nov.5	Dec.1	Dec.31
Common Stock	$ 360,000	$ 360,000	$ 360,000	$ 360,000	$ 396,000	$ 396,000	$ 396,000
Common Stock Dividend Distributable	-	$ -	$ -	$ 36,000	$ -	$ -
Paid in Capital in excess of par, Com. Stock	100,000	$ 100,000	$ 100,000	$ 139,000	$ 139,000	$ 139,000	$ 139,000
Retained Earnings	360,000	$ 288,000	$ 288,000	$ 213,000	$ 213,000	$ 213,000	$ 503,000
Total Equity	$ 820,000	$ 748,000	$ 748,000	$ 748,000	$ 748,000	$ 748,000	$1,038,000

Steps or Explanation to the answer.

1. On Oct. 2, Cash Dividend of $72,000 is declared that leads to reduction in Retained earnings from $360,000 to $288,000. Common stock and paid in capital in excess of par remains same as $360,000 and $100,000.Total equity on this date is $748,000.

2. On Oct. 25, there is no effects on equity section due to payment of dividend. It will have impacts on cash and current liability dividend payable.

3. On Oct.31, Common Stock Dividend is Declared for $75,000 out of retained earnings. Common Stock dividend reduces the Retained Earning is reduced by $75,000 ( from $288,000 to $213,000). Common Stock Dividend Distributable increases by $36,000 and Paid in capital excess of par- by $39,000. So, on this date, Common Stock is $360,000, Common Stock Dividend Distributable $36,0000 and paid in capital in excess of par increases from $100,000 to $139,000. Total equity on this date remains $748,000.

4. On Nov. 5, Common Stock increases by $36,000 and it totals $396,000 and Common Stock Dividend Distributable decreases by $36,000 and become zero. There is no effects on retained earnings-$213,000 and paid in capital-$139,000.

5. On Dec. 5, there is change in the par value of Common Stock of $12. The new par value of Common Stock is $4. This transaction does not effect total common stock but it increase the number of common stocks from earlier numbers of common stock 33,000 to 99,000 proportionately 3 ($12/$4) times higher than earlier. There is no effects on any items of equity except the new number of common stock.

6. On Dec. 31, the income summary is closed to retained earnings. This leads to increase in retained earnings by $290,000. The total retained earnings on this date becomes $503,000 (213,000 + 290,000). There is no effects on

any other items in equity section. The total equity on this date becomes $1,038,000.

ekkarill92 answered 1 year ago

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