Question

Problem 18-8 The balance sheet of Consolidated paper, Inc., included the following shareholders’ equity accounts at December 31, 2017.

Paid-in capital:
Preferred stock, 8.5%, 84,000 shares at $1 par	$      84,000
Common stock, 343-400 shares at $1 par	343,400
Paid-in capital-excess of par, preferred	1, 465,000
Paid-in capital-excess of par, common	2,515,000
Retained earnings	8,445,000
Treasury stock, at cost; 3,400 common shares	(34,000)
Total shareholders’ equity	$12,818,400

1. Prepare the appropriate entries for these events.

1. On March 3 the board of directors declared a property divided of 220,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $426,000). The investment shares has a fair value of $2 per share and were distributed March 31 to shareholders of record March 15.
2. On May 3 a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $10 per share.
3. On July 5 a 2% common stock dividend was declared and distributed. The market value of the common stock was $10 per share.
4. On December 1 the board of directors declared the 8.5% cash dividend on the 84,000 preferred shares, payable on December 28 to shareholders of record December 20.
5. On December 1 the board of directors declared a cash dividend of $0.50 per share on its common shares, payable on December 28 to shareholders of record December 20.

Record any necessary adjustments to the Leasco International stock account s a result of the property dividend declaration.

Date	General Journal	Debit	Credit

2. Prepare the shareholders’ equity section of the balance sheet for Consolidated Paper, Inc., at December 31, 2018. Net income for the year was $740,000.

Consolidated Paper, Inc. (Shareholders’ Equity section December 31, 2018
Total shareholders’ eqity

Answer 1

Answer :

Date	Account title	Debit	Credit		working Notes
Mar 3	Investment in Leasco International	14000			(220000*2)-426000
	Gain on Investment		14000
Mar 3	Retained Earning	440000			220000*2
	Property Dividend Payable		440000
Mar 31	Property Dividend Payable	440000
	Investment in Leasco International		440000
May 3	Paid-in capital—Excess of par, common	85000			25% (343400-3400)
	Common Stock		85000
Jul 5	Retained Earning	85000			8500*10
	Common Stock		8500		2% (343400-3400+85000)
	Paid-in capital—Excess of par, common		76500		8500*(10-1)
Dec 1	Retained Earning	7140			84000*8.5%
	Dividend Payable		7140
Dec 28	Dividend Payable	7140
	Cash		7140
Dec 1	Retained Earning	216750			0.5*(340000+85000+8500)
	Dividend Payable		216750
Dec 28	Dividend Payable	216750
	Cash		216750

Shareholder Equity Section
	$	Working Notes
Preferred Stock	84000
Common Stock	436900	(343400+85000+8500)
Pain in capital, excess at par, Preferred	1465000
Pain in capital, excess at par, Common	2506500	2515000-85000+76500
Retained Earning	8436110	8445000-440000-85000-7140-216750+740000
Treasury Stock	-34000
Total Shareholder's Equity	12894510