On January 1, 2012, Saa Corporation had the following stockholders\' equity acco
ID: 2363474 • Letter: O
Question
On January 1, 2012, Saa Corporation had the following stockholders' equity accounts. Common Stock (no par value, 92,000 shares issued and outstanding) $1,372,300 Retained Earnings 526,200 During the year, the following transactions occurred. Feb. 1 Declared a $1 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 4-for-1 stock split. Prior to the split, the market price per share was $34. July 1 Declared a 5% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $10 per share. July 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.7 per share dividend to stockholders of record on December 15, payable January 5, 2013. Dec. 31 Determined that net income for the year was $302,900. Instructions Prepare the stockholders' equity section of the balance sheet at: a) March 31, b) June 30, (c) September 30, and (d) December 31, 2012.Explanation / Answer
Feb.1 declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1
Dr Retained earnings $90,000 (90,000 shares x $1)
Cr Dividend payable $90,000
Mar. 1 Paid the dividend declared in February
Dr Dividend payable $90,000
Cr Cash $90,000
Stockholders' equity section at: (A) March 31
Common Stock (no par value, 90,000 shares issued and outstanding) $1,400,000
Retained Earnings 410,000 ($500,000 - $90,000)
Total $1,810,000
Apr. 1 Announced a 4-for-1 stock split. Prior to the split, the market price per share was $36
no journal entry is needed to account for a stock split, but it should be noted that the no. of shares is now 360,000 (90,000 x 4)
Stockholders' equity section at: (B) June 30
Common Stock (no par value, 360,000 shares issued and outstanding) $1,400,000
Retained Earnings 410,000
Total $1,810,000 (no change)
July 1 Declared a 5% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $13 per share
Dr Retained earnings $234,000 (360,000 shares x 5% x $13)
Cr Common Stock Dividend Distributable $234,000
July 31 Issued the shares of the stock dividend
Dr Common stock dividend distributable $234,000
Cr Common stock $234,000 (there are now 378,000 shares)
Stockholders' equity section at: (C) September 30
Common Stock (no par value, 378,000 shares issued and outstanding) $1,634,000 ($1,400,000 + $234,000)
Retained Earnings 176,000 ($410,000 - $234,000)
Total $1,810,000 (no change)
Dec 1. Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2009.
Dr Retained earnings $189,000 (378,000 shares x $0.50)
Cr Dividend payable $189,000
Dec 31. Determined the net income for the year was $350,000
Stockholders' equity section at: (D) December 31 2008
Common Stock (no par value, 378,000 shares issued and outstanding) $1,634,000
Retained Earnings $337,000 ($176,000 - $189,000 + $350,000)
Total $1,971,000
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