Question

On January 1, 2019, Blue Spruce Corp. had the following stockholders' equity accounts.

Common Stock ($14 par value, 77,300 shares issued and outstanding)

$1,082,200 Paid-in Capital in Excess of Par Value-Common Stock 203,000

Retained Earnings 581,000

During the year, the following transactions occurred.

Jan. 15 Declared a $1.12 cash dividend per share to stockholders of record on January 31, payable February 15.

Feb. 15 Paid the dividend declared in January.

Apr. 15 Declared a 5% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $16 per share.

May 15 Issued the shares for the stock dividend.

July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $13. (The new par value is $7.)

Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2020.

Dec. 31 Determined that net income for the year was $225,000.

Journalize the transactions and the closing entries for net income and dividends.

Answer 1

Date	Particulars	Debit ($)	Credit ($)
Jan 15	Cash Dividends (1.12*77,300)	86,576
	Dividends payable		86,576
	(To record declaration of dividend)
Feb 15	Dividend Payable	86,756
	Cash		86,756
	(To record dividend payment)
April 15	Stock Dividends	61,840
	Common stock dividend payable (1082,200*5%)		54,110
	Paid in capital-excess capital – common stock [77,300*(16-14)*5%]		7,730
	(To record declaration of stock dividends)
May 15	Common stock dividend payable	54,110
	Common stock		54,110
	(To record issue of stock dividends)
July 1	No entry
Dec 1	Cash Dividend (77,300*2) *0.60	92,760
	Dividend Payable		92,760
	(To record declaration of dividend)
Dec 31	Income summary	225,000
	Retained earnings		225,000
	(To close retained earnings)
Dec 31	Retained earnings	241,176
	Stock dividend		61,840
	Cash dividend (92,760+86,576)		179,336
	(To close dividends)

Note that last entry can be done separately.

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