1) Langley Corporation has 45,000 shares of $11 par value common stock outstandi
ID: 2420439 • Letter: 1
Question
1) Langley Corporation has 45,000 shares of $11 par value common stock outstanding. It declares a 10% stock dividend on December 1 when the market price per share is $17. The dividend shares are issued on December 31.
Prepare the entries for the declaration and issuance of the stock dividend.
Stock Dividends
Common Stock Dividends
Paid in Capital in Excess
Common Stock Dividends
Common Stock
2) The stockholders’ equity section of Pretzer Corporation consists of common stock ($10 par) $2,070,000 and retained earnings $541,000. A 10% stock dividend (20,700 shares) is declared when the market price per share is $15. Show the before-and-after effects of the dividend on the following.
Compute the stockholders equity BEFORE DIVIDEND AND AFTER DIVIDEND.
3) Jurgens Company has had 4 years of net income. Due to this success, the market price of its 400,000 shares of
$4 par value common stock has increased from $14 per share to $51. During this period, paid-in capital remained the same at $4,230,000. Retained earnings increased from $1,700,000 to $11,400,000. President E. Rife is considering either a 15% stock dividend or a 2-for-1 stock split.
WHAT IS THE RETAINED EARNINGS AFTER STOCK SPLIT?
WHAT IS TOTAL STOCKHOLDERS EQUITY AFTER STOCK DIVIDEND?
WHAT IS TOTAL STOCKHOLDERS EQUITY AFTER STOCK SPLIT?
5)Pine Corporation has the following accounts at December 31: Common Stock, $8 par, 4,500 shares issued, $36,000; Paid-in Capital in Excess of Par—Common Stock $31,000; Retained Earnings $46,000; and Treasury Stock, 400 shares, $8,000.
Prepare the stockholders’ equity section of the balance sheet.
Explanation / Answer
1.
a. stock dividend dr. $76500 (4500*17)
to common stock dividend a/c $49500 (4500*11)
to paid in capital in excess a/c $27000 (4500*6)
being dividend booked
b. common stock dividend a/c dr. $49500
to common stock a/c $49500
being dividend stock issued.
2.
befor dividend:
shareholders equity:
share capital $2070000
retained earning $541000
Total funds for shareholder $2611000
after dividend:
share capital $2277000
retained earning $334000
total fund for shareholders $2611000
there will be no change in shareholders equity.
3.
a. in case of stock split there will be no change in retained earning.
b.stock holder's equity after stock dividend:
(paid in capital + retained earning+share capital)= 4230000+11160000+1840000= $17230000
stock holder's equity after stock split:
4230000+11400000+1600000= $17230000
5.
Balance sheet
liability
Shareholders equity
common stock $36000
Excess paid in capital $31000
Retained Earning $46000
treasury stock ($8000)
Total shareholder equity $105000
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