The stockholders’ equity accounts of Karp Company at January 1, 2014, are as fol
ID: 2451757 • Letter: T
Question
The stockholders’ equity accounts of Karp Company at January 1, 2014, are as follows.
There were no dividends in arrears on preferred stock. During 2014, the company had the following transactions and events.
Recognized a $201,000 restriction of retained earnings for plant expansion.
Enter the beginning balances in the accounts, and post to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed.)
Preferred Stock, 6%, $50 par $580,000 Common Stock, $7 par 1,099,000 Paid-in Capital in Excess of Par—Preferred Stock 190,900 Paid-in Capital in Excess of Par—Common Stock 292,200 Retained Earnings 771,400Explanation / Answer
Preferred Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 580,000
Common Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 1,099,000
Common Stock Dividend Distributable
Date
Explanation
Debit
Credit
Balance
July. 1
Cash Dividend- Common Stock
$ 94,200
$ 94,200
Sept. 1
Dividend Paid
$ 94,200
$ -
Dec. 1
Stock Dividend
$ 400,350
$ 400,350
Dec. 15
Cash Dividend- Pref Stock
$ 34,800
$ 435,150
Paid in Capital in excess of Par- Preferred Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 190,900
Paid in Capital in excess of Par- Common Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 292,200
Retained Earnings
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 771,400
July. 1
Cash Dividend (1099000/7)*0.60
$ 94,200
$ 677,200
Aug. 1
Depreciation Adjustment
$ 26,900
$ 650,300
Dec. 1
Stock Dividend (1099000/7)*15%*17
$ 400,350
$ 249,950
Dec. 15
Cash Dividend (580000*6%)
$ 34,800
$ 215,150
Dec. 31
Net income
$ 385,100
$ 600,250
Dec. 31
Plant Expansion
$ 201,000
$ 399,250
Cash Dividends
Date
Explanation
Debit
Credit
Balance
July. 1
Cash Dividend - Common Stock
$ 94,200
$ 94,200
July. 1
Dividend Distributable
$ 94,200
$ -
Dec. 15
Cash Dividend - Pref. Stock
$ 34,800
$ 34,800
Dec. 15
Dividend Distributable
$ 34,800
$ -
Stock Dividends
Date
Explanation
Debit
Credit
Balance
Dec. 1
Stock Dividend (580000/50)*15%*17
$ 400,350
$ 400,350
Dec. 1
Dividend Distributable
$ 400,350
$ -
Preferred Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 580,000
Common Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 1,099,000
Common Stock Dividend Distributable
Date
Explanation
Debit
Credit
Balance
July. 1
Cash Dividend- Common Stock
$ 94,200
$ 94,200
Sept. 1
Dividend Paid
$ 94,200
$ -
Dec. 1
Stock Dividend
$ 400,350
$ 400,350
Dec. 15
Cash Dividend- Pref Stock
$ 34,800
$ 435,150
Paid in Capital in excess of Par- Preferred Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 190,900
Paid in Capital in excess of Par- Common Stock
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 292,200
Retained Earnings
Date
Explanation
Debit
Credit
Balance
Jan. 1
Balance
$ 771,400
July. 1
Cash Dividend (1099000/7)*0.60
$ 94,200
$ 677,200
Aug. 1
Depreciation Adjustment
$ 26,900
$ 650,300
Dec. 1
Stock Dividend (1099000/7)*15%*17
$ 400,350
$ 249,950
Dec. 15
Cash Dividend (580000*6%)
$ 34,800
$ 215,150
Dec. 31
Net income
$ 385,100
$ 600,250
Dec. 31
Plant Expansion
$ 201,000
$ 399,250
Cash Dividends
Date
Explanation
Debit
Credit
Balance
July. 1
Cash Dividend - Common Stock
$ 94,200
$ 94,200
July. 1
Dividend Distributable
$ 94,200
$ -
Dec. 15
Cash Dividend - Pref. Stock
$ 34,800
$ 34,800
Dec. 15
Dividend Distributable
$ 34,800
$ -
Stock Dividends
Date
Explanation
Debit
Credit
Balance
Dec. 1
Stock Dividend (580000/50)*15%*17
$ 400,350
$ 400,350
Dec. 1
Dividend Distributable
$ 400,350
$ -
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