On January 1, 2010, Weiser Corporation had the following stockholders\' equity a

Question

On January 1, 2010, Weiser Corporation had the following stockholders' equity accounts. Common Stock ($5 par value, 200,000 shares issued and outstanding) $1,000,000. Paid in capital in excess of par value $200,000. Retained earnings $840,000. During the year, the following transactions occurred. Jan. 15 Declared a $1 cash dividend per share to stockholders' of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. April 15, the market price of the stock was $15 per share. May 15 Issued the shares for the stock dividend. July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17. (The new par value is $2.50). Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2011. Dec. 31 Determined that net income for the year was $250,000. a.) Journalize the transactions and the closing entry for the net income. b.) Skip c.) Prepare a stockholders' equity section at December 31.

Explanation / Answer

Jan. 15 Declared a $1 cash dividend per share to stockholders of record on January 31, payable February 15. Dr Retained Earnings 200,000 Cr Cash Dividends Payable 200,000 Feb. 15 Paid the dividend declared in Jan. Dr Cash Dividends Payable 200,000 Cr Cash 200,000 Apr 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15 the market price of the stock was $15 per share 200,000 x 10% x 15 = $300,000 Total dividend Dr Retained Earnings 300,000 Cr Paid-In Capital in Excess of Par 200,000 Cr Stock Dividends Distributable 100,000 (200,000 x 10% x $5 par value) May 15 Issued the shares for the stock dividend Dr Stock Dividends Distributable 100,000 Cr Common Stock 100,000 *Note: There are now 220,000 shares of stock outstanding July 1 Announced a 2-for-1 stock split. The Market price per share prior to the announcement was $17.(the new par value is $2.50) No journal entry is needed for a stock split. But it should be noted that there are now 440,000 shares of stock outstanding with a $2.50 par value Dec 1 Declared a $.50 per share cash dividend to stockholders of record on Dec. 15, payable Jan. 10, 2011 440,000 x 0.50 = $220,000 dividend Dr Retained Earnings 220,000 Cr Cash Dividends Payable 220,000 Dec 31 Determined that net income for the year was $250,000 Dr Income Summary 250,000 Cr Retained Earnings 250,000 Stockholders' Equity Dec. 31, 2010 Common Stock ($2.50 par value, 440,000 shares issued and outstanding) 1,100,000 Paid-in Capital in Excess of Par Value 400,000 Retained Earnings 370,000 Total Stockholders' Equity $1,870,000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.