PROBLEM 5 (12 points): On January 1, 2017, Getsi Corporation had the following s

Question

PROBLEM 5 (12 points): On January 1, 2017, Getsi Corporation had the following stockholders' equity accounts. Common Stock ($10 par value, 100,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,000,000 200,000 450,000 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 Mar. 1 Apr 15 Issued 10,000 shares of common stock at $12 per share. 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 $13 per share. May 15 Issued the shares for the stock dividend June 20 Purchased 2,000 shares of its $10 par common stock at $15 per share. July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17 Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable Jan.5, 2018 Dec. 31 Determined that net income for the year was $200,000. Instructions Jlourmalize the transactions and closing entries for net income and dividends. Note: Write clearly and use complete account names [do not abbreviate General Journal J1 Date Account Titles and Explanation Ref.Debit Credit

Explanation / Answer

Date Account title Debit credit Jan 15 cash dividend 100000 cash dividend payable [100000*1] 100000 Feb 15 cash dividend payable 100000 cash 100000 mar 1 cash [10000*12] 120000 common stock [10000*10] 100000 paid in capital in excess of par -common stock 20000 Apr 15 stock dividend 143000 stock dividend distributable 143000 [number of shares outstanding 100000+10000= 110000*.10 = 11000*13] may 15 stock dividend distributable 143000 common stock [11000*10] 110000 paid in capital in excess of par -common stock 33000 June 20 cash [2000*15] 30000 common stock [2000*10] 20000 paid in capital in excess of par -common stock 10000 july 1 no entry is required ..number of shares outstanding will increase from =[100000+10000+11000+2000 = 123000] to 123000*2= 246000 shares and par value decreased from 10 to $ 5 dec 1 cash dividend 123000 cash dividend payable [246000*.50] 123000 dec 31 Income summary 200000 Retained earning 200000

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