Question

Problem 14-01A a-c (Part Level Submission) (Video)

On January 1, 2020, Sandhill Corporation had the following stockholders’ equity accounts.

Common Stock ($20 par value, 63,500 shares issued and outstanding)		$1,270,000
Paid-in Capital in Excess of Par—Common Stock		197,000
Retained Earnings		564,000

During the year, the following transactions occurred.

Feb. 1		Declared a $2 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1		Paid the dividend declared in February.
Apr. 1		Announced a 2-for-1 stock split. Prior to the split, the market price per share was $38.
July 1		Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $15 per share.
31		Issued the shares for the stock dividend.
Dec. 1		Declared a $0.60 per share dividend to stockholders of record on December 15, payable January 5, 2021.
31		Determined that net income for the year was $300,500. (b) 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 part.) Common Stock Date Explanation Ref Debit Credit Balance Balance Common Stock Dividends Distributable Date Explanation Ref Debit Credit Balance Paid-in Capital in Excess of Par Common Stock Date Explanation Ref Debit Balance Credit Balance Retained Earnings Date Explanation Ref Debit Credit Balance Balance Net income Stock dividend Cash dividend Cash Dividends Date Explanation Ref Debit Credit Balance Stock Dividends Date Explanation Ref Debit Credit Balance

Answer 1

b)
Common stock
Date	Explanation	Ref.	Debit	Credit	Balance
Jan.  1	Balance				$1,270,000
Apr.  1	2 for 1 split—new   par $10			$127,000
31-Jul					$1,397,000
Common Stock Dividends Distributable
Date	Explanation	Ref.	Debit	Credit	Balance
1-Jul				$127,000	$127,000
			$127,000
31-Jul					0
Paid-in Capital in Excess of Par Value
Date	Explanation	Ref.	Debit	Credit	Balance
Jan.  1	Balance				$ 197,000.00
July  1				$63,500	$260,500
Retained Earnings
Date	Explanation	Ref.	Debit	Credit	Balance
Jan.  1	Balance				$ 564,000.00
Feb.  1	Cash dividend		$ 127,000.00		$ 437,000.00
July  1	Stock dividend		$ 285,750.00		$ 151,250.00
Dec.  1	Cash dividend		$   83,820.00		$   67,430.00
31	Net income			$ 300,500.00	$ 367,930.00
Cash Dividends
Date	Explanation	Ref.	Debit	Credit	Balance
Feb.  1	Retained Earnings			$ 127,000.00	$ 127,000.00
Dec.  1	Retained Earnings			$   83,820.00	$ 210,820.00
Stock dividends
Date	Explanation	Ref.	Debit	Credit	Balance
1-Jul	Retained Earnings			$ 285,750.00	$ 285,750.00

A C D E 17 Common stock Ref. 18 Date Explanation Debit Credit Balance Balance 19 Jan. 1 C3 2 for 1 split-new 20 Apr. 1 par $10 -63500 2 21 43677 F19+E20 22 23 Common Stock Dividends Distributable Ref Explanation Credit Balance 24 Date Debit 25 43647 -E20 -E25 -E20 26 27 43677 28 29 Paid-in Capital in Excess of Par Value Ref Explanation 30 Date Debit Credit Balance C4 31 Jan. 1 Balance 32 July 1 (15-10) E25/10 - F31+ E32 33 34 Retained Earnings Ref Debit 35 Date Explanation Balance Credit Balance 36 Jan. 1 C5 37 Feb. 1 - 63500 2 Cash dividend =F36-D37 -63500 2 15% . 15 - F21/10 0.6 38 July 1 Stock dividend =F37-D38 39 Dec. 1 Cash dividend =F38-D39 -F39+ E40 40 31 Net income 300500 41 42 Cash Dividends Explanation Ref Debit Credit 43 Date Balance 44 Feb. 1 Retained Earnings -D37 -E44 45 Dec. 1 Retained Earnings -D39 F44+E45 46 47 Stock dividends 48 Date Explanation Retained Earnings Ref Debit Balance . Credit 49 43647 D38 E49 50 51