Question

On January 1, 2019, Pina Colada Corp. had the following stockholders' equity accounts.

Common Stock ($10 par value, 80,500 shares issued and outstanding)		$805,000
Paid-in Capital in Excess of Par Value-Common Stock		211,000
Retained Earnings		548,000

During the year, the following transactions occurred.

Jan. 15		Declared a $1.10 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 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $15 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 $15. (The new par value is $5.)
Dec. 1		Declared a $0.50 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 $245,000.

questions:

Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (Post entries in the order of journal entries presented in the previous question.) Common Stock Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Balance √ Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Common Stock Dividends Distributable Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Paid-in Capital in Excess of Par Value—Common Stock Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Balance √ Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Retained Earnings Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Balance √ Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Cash dividends Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Stock dividends Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Net income Cash Dividends Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Stock Dividends Date Explanation Ref. Debit Credit Balance Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31 Jan. 1Jan. 15Jan. 31Apr. 15May 15July 1Dec. 1Dec. 31

Prepare a stockholders' equity section at December 31, 2019. (Enter the account name only and do not provide the descriptive information provided in the question.) Pina Colada Corp. Balance Sheet (Partial) For the Month Ended December 31, 2019For the Year Ended December 31, 2019December 31, 2019 Additional Paid-in CapitalCapital StockCurrent AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesPaid-in CapitalProperty, Plant and EquipmentStockholders' EquityTotal Additional Paid-in CapitalTotal AssetsTotal Capital StockTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Paid-in CapitalTotal Property, Plant and EquipmentTotal Stockholders' Equity $ $

Answer 1

Stock Dividend is the distribution of additional shares each shareholder in an amount proportional their current number of shares. There is no impact on the par value of the share as well as the total shareholders equity. When the Stock dividend is issued, "Retained Earnings' are debited based on the market values of the shares, "Common Stock" is credited by the par value of shares and amount above the par value is credited "Paid-in-Capital in excess of Par value of Common Stock"

In stock split, value will not change. In this only the number of shares outstanding changes and the par value per share is reduced. Hence. No accounting entry is required in the stock split.

Credit Date Jan 15 [80500 x $1.10] $88,550 Feb 15 $88,550 Apr 15 [(80500 x 10%) x $15] $80,500 $40,250 May 15 $80,500 July 1 Account Title Debit Cash Dividend $88,550 Dividend Payable (To record declaration of cash dividend) Dividend Payable $88,550 Cash (To record Payment of cash dividend) Stock Dividend $120,750 Common Stock Dividends Distributable Paid-in Capital in Excess of Par Value-Common Stock (To record declaration of stock dividend) Common Stock Dividends Distributable $80,500 Common Stock (To record issue of stock dividend) No entry reuired No entry reuired Cash Dividend $88,550 Dividend Payable (To record declaration of cash dividend) Dividend Payable $88,550 Cash (To record Payment of cash dividend) Retained Earnings $297,850 Cash Dividend Stock Dividend (To close the stock dividend and cash dividend account) Income Summary $245,000 Retained Earnings (To transfer the net income to retained earnings) Dec 1 [{(80500 + 8500)x2) x$0.50] $88,550 Dec 31 $88,550 Dec 31 $177,100 $120,750 Dec 31 $245,000

Debit Common Stock Date Explanation Jan 1 Balance May 15 Stock Dividend Credit $805,000 $80,500 Balance $805,000 $885,500 Common Stock Dividends Distributable Date Explanation Apr 15 Declaration of Stock Dividend May 15 Issue of Stock dividend Ref Debit Credit $80,500 $0 Balance $80,500 $80,500 So Ref Debit Paid-in Capital in Excess of Par Value-Common Stock Date Explanation Jan 1 Balance Apr 15 Declaration of Stock Dividend Credit $211,000 $40,250 Balance $211,000 $251,250 Debit Retained Earnings Date Explanation Jan 1 Balance Dec 31 Cash Dividend Dec 31 Stock Dividend Dec 31 Net Income Credit $548,000 $0 $177,100 $120,750 Balance $548,000 $370,900 $250,150 $495,150 $245,000 Cash Dividend Date Explanation Jan 15 Cash Dividend Dec 1 Cash Dividend Dec 31 Closing of account Debit $88,550 $88,550 Credit $0 $0 $177,100 Balance $88,550 $177,100

Stock Dividend Date Explanation Apr 15 Stock Dividend Dec 31 Closing of account Debit $120,750 Credit $0 $120,750 Balance $120,750 $0 Pina Colada Corp. Balance Sheet (Partial) For the Year Ended December 31, 2019 Stockholders' Equity Common Stock Paid-in Capital in Excess of Par Value-Common Stock Total Paid in Capital Retained Earnings Total Stockholders' Equity $885,500 $251,250 $1,136,750 $495,150 $1,631,900