Required (a) Journalize the transactions and the closing entries for net income

Question

Required (a) Journalize the transactions and the closing entries for net income and dividends. (b) Using T-Accounts;Enter the beginning balances, and post the entries, from (a) above, to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a partial Balance Sheet of just the Stockholders'Equity section at December 31,2017. On January 1, 2017, Matthew Corporation had tne tolowing stockholders' equity accounts. Common Stock ($10 par value, 75,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $750,000 150,000 300,000 Jan. 15 Declared a SI cash dividend per share to stockholders of record on January 31, payable February 15 Paid the dividend declared in January. 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 $14 per share. Issued the shares for the stock dividend. Announced a 2-for-i stock spiit. The market price per share prior to the announcement was $15. (The new par value is S5.) Declared a S0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2018, Determined that net income for the year was $250,000 Feb. Apr. 15 15 May July 15 1 1 31 Dec.

Explanation / Answer

Journal Entries :

T Accounts:

C) Shareholder's Equity section of the Closing Balance Sheet :

Date Accounts Titles and explanation Debit $ Credit $ Jan 15 Dividend 75000 Dividend Payable 75000 (75000*$1=$75000) Feb 15 Dividend Payable 75000 Cash 75000 Apr 15 Stock Dividend 105000 Stock Distributable 75000 Capital paid in addition to par 30000 (75000 * 10% * $14 = $105000) May 15 Stock Distributable 75000 Common Stock 75000 July 1 No Entry Dec 1 Dividend 49500 Dividend Payable 49500 [ (75000 + 7500) * $0.60 ] = 49500 Dec 31 Retained Earnings 229500 Dividend 75000 Stock Dividend 105000 Dividend 49500 (being dividends transferred to Retained Earnings) Dec 31 Income/Revenue Statement 250000 Retained Earnings 250000

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