ook Show Me How Calculator Entries for stock dividends Chart of Accounts Journal
ID: 2606085 • Letter: O
Question
ook Show Me How Calculator Entries for stock dividends Chart of Accounts Journal Final Questions Instructions Advanced Life Co. is an HMO for businesses in the Portland area The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (1,000,000 shares authorized, 480,000 shares issued), $4 par, $1,920,000, Paid-in capital in excess of par common stock, $800,000, and Retained eaminas S34 350,000 The board of dre tors declared a 3% s ock dvidend when the market price of he stock was S 13 a share. Advanced Lie co reported no income or loss for the current year Required: A Journalize the entries to record (1) the declaration of the dividend on December 1, capitailizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles B. Determine the following amounts before the stock dividend was declared: (t) total paid-in capital, (2) total retained earnings, and (3) total C. Determine the following amounts after the stock dividend was deciared and closing entries were recorded at the end of the year. (1) total paid- in capital, (2) total retained earnings, and (3) total stockhoiders' equityExplanation / Answer
Answer:
1
Journal Entry for the issue and payment of the dividend
Date
Description
Debit $
Credit $
1-Dec
Stock dividend
(480,000*3%*13)
187200
Common stock Dividend Distributable
(480,000*3%*4)
57600
paid in capital In excess of par-Common
(480,000*3%*9)
129600
31-Dec
Common stock Dividend Distributable
57600
Common stock-$4 par
57600
______________________________________
2
Balancesheet (partial)
AS on dec-1
Paid in capital
Common stock .$4 par value, 1,000,000 authorized and 480,000 issued
1,920,000
paid in capital In excess of par-Common
800,000
Total paid in capital
2,720,000
Add:
Retained earning
34,350,000
Total Stock holder's equity
37,070,000
Total paid in capital
2720000
Retained earning
34350000
Total Stock holder's equity
37070000
____________________________________________
3
Balance sheet (partial)
AS on dec-31
Paid in capital
Common stock .$4 par value, 1,000,000 authorized and 480,000 issued
1,977,600
paid in capital In excess of par-Common
929,600
Total paid in capital
2,907,200
Add:
Retained earning(34350,000-187200)
34,162,800
Total Stock holder's equity
37,070,000
Total paid in capital
2907200
Retained earning
34162800
Total Stock holder's equity
37070000
Date
Description
Debit $
Credit $
1-Dec
Stock dividend
(480,000*3%*13)
187200
Common stock Dividend Distributable
(480,000*3%*4)
57600
paid in capital In excess of par-Common
(480,000*3%*9)
129600
31-Dec
Common stock Dividend Distributable
57600
Common stock-$4 par
57600
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