Retained Earnings: Transactions and Statement The stockholders\' equity accounts

Question

Retained Earnings: Transactions and Statement The stockholders' equity accounts of Rayburn Corporation as of January 1 appear below: Common stock, $1 O par value, 400,000 shares authorized; 160,000 shares issued and outstanding Paid-in capital in excess of par value Retained earnings $800,000 920,000 513,000 During the year, the following transactions occurred June 7 Declared a 20 percent stock dividend; market value of the common stock was $15 per share June 28 Issued the stock dividend declared on June 7 Dec. 5 Declared a cash dividend of $1.50 per share. Dec. 26 Paid the cash dividend declared on December 5. Required a. Prepare journal entries to record the foregoing transactions. General Journal Date Description Debit Credit Jun.07 Stock Dividends Distributable Declared stock dividend Jun.28 Common Stock Issued common shares as stock dividend.

Explanation / Answer

stock dividend = 160,000*20% 32000 Date Description Debit Credit 7-Jun Retained earnings (32000*15) 480000 Stock dividends distributable (32000*10) 320000 Paid in capital in excess of par (32000*5) 160000 28-Jun Stock dividends distributable 320,000 Common stock 320,000 5-Dec Retained earnings 288000 Dividends payable (192000*1.5) 288,000 26-Dec Dividends payable 288,000 to cash 288,000 Statement of retained earnings Retained earnings,Jan 1 513,000 add: Net income 425,000 938,000 less:cash dividend 288,000 stock dividends declared 480,000 768,000 total stockholders Equity 170,000

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