Advanced Life Co. is an HMO for businesses in the Portland area. The following a

Question

Advanced Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock

The stock outstanding when a corporation has issued only one class of stock.

(800,000 shares authorized; 460,000 shares issued), $5 par

The monetary amount printed on a stock certificate.

, $2,300,000; Paid-in capital

Capital contributed to a corporation by the stockholders and others.

in excess of par—common stock, $850,000; and Retained earnings

Net income retained in a corporation.

, $34,950,000. The board of directors declared a 2% stock

Shares of ownership of a corporation.

dividend when the market price of the stock was $15 a share. Advanced Life Co. reported no income or loss for the current year.

Required:

The owners' equity in a corporation.

Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity

A. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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A. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles. B. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity

The owners' equity in a corporation.

. C.

Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders’ equity

CHART OF ACCOUNTS Advanced Life Co. General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Notes Receivable 132 Interest Receivable 141 Merchandise Inventory 145 Office Supplies 151 Prepaid Insurance 181 Land 193 Equipment 194 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 221 Notes Payable 226 Interest Payable 231 Cash Dividends Payable 236 Stock Dividends Distributable 241 Salaries Payable 261 Mortgage Note Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary

A. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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DATE DESCRIPTION POST. REF. DEBIT CREDIT

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Explanation / Answer

A.

B & C:

Account Title Debit Credit $ $ A.1 Retained earnings (9,200 shares @ $15) 138,000 Stock dividends distributable (9,200 shares @ $5 ) 46,000 Paid-in capital in excess of par- common stock (9,200 shares @ $10) 92,000 A.2 Stock dividends distributable 46,000 Common stock 46,000

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