(a) Journalize the transactions and the closing entries for net income and divid
ID: 2459197 • Letter: #
Question
(a)
Journalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)
On January 1, 2014, Geffrey Corporation had the following stockholders’ equity accounts.Common Stock ($22 par value, 51,000 shares issued and outstanding) $1,122,000 Paid-in Capital in Excess of Par—Common Stock 193,300 Retained Earnings 610,500
During the year, the following transactions occurred.
Feb. 1 Declared a $2 cash dividend per share to stockholders of record on February 15, payable March 1. Mar. 1 Paid the dividend declared in February. Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $35. July 1 Declared a 13% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $15 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2015. 31 Determined that net income for the year was $322,000.
Explanation / Answer
Journal Entries are given below:
Date
Account Titles and Explanation
Debit
Credit
February 1
Retained Earnings (2*51000)
Dividends Payable
(cash dividend declared)
102,000
102,000
March 1
Dividends Payable
Cash
(cash paid against dividends due)
102,000
102,000
April 1
No entry required. Stock split increases no of shares
102,000 (51,000 * 2), and decreases par value to $11 per share
July 1
Retained Earnings (13260*15)
Common stock dividends distributable (13260*11)
Paid in capital in excess of par value (13260*4)
(declaring of stock dividend of 13%)
198,900
145,860
53,040
July 31
Common Stock dividends distributable
Common stock
(issue of shares against stock dividend declared)
145,860
145,860
December 1
Retained earnings
Dividends payable
(dividend declared @ $0.50 per share)
51,000
51,000
December 31
Income Summary
Retained Earnings
(net income for the year closed to income summary)
322,000
322,000
Date
Account Titles and Explanation
Debit
Credit
February 1
Retained Earnings (2*51000)
Dividends Payable
(cash dividend declared)
102,000
102,000
March 1
Dividends Payable
Cash
(cash paid against dividends due)
102,000
102,000
April 1
No entry required. Stock split increases no of shares
102,000 (51,000 * 2), and decreases par value to $11 per share
July 1
Retained Earnings (13260*15)
Common stock dividends distributable (13260*11)
Paid in capital in excess of par value (13260*4)
(declaring of stock dividend of 13%)
198,900
145,860
53,040
July 31
Common Stock dividends distributable
Common stock
(issue of shares against stock dividend declared)
145,860
145,860
December 1
Retained earnings
Dividends payable
(dividend declared @ $0.50 per share)
51,000
51,000
December 31
Income Summary
Retained Earnings
(net income for the year closed to income summary)
322,000
322,000
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