Question

The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. Stockholders' Equity January 1 Common stock-$4 par value, 100, 000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 160,000 120,000 320,000 $ 600,000 Stockholders' Equity (December 31) Common stock-$4 par value, 100, 000 shares authorized, 47, 400 shares issued, 3,000 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($30,000 restricted by treasury stock) $ 189, 600 179, 200 400,000 768, 800 (30,000) $ 738, 800 Less cost of treasury stock Total stockholders' equity The following transactions and events affected its equity during the year. Jan 5 Declared a $0.50 per share cash dividend, payable on January 10. Mar 20 Purchased treasury stock for cash Apr. 5 Declared a $0.50 per share cash dividend, payable on April 10. July 5 Declared a $0.50 per share cash dividend, payable on July 10. July 31 Declared a 20% stock dividend when the stock's market value was $12 per share 14 Issued the stock dividend that was declared on July 31. Oct. 5 Declared a $0.50 per share cash dividend, date of record October 10. Requirement General Journal General Ledger Trial Balance Cash Dividends Stock Dividend General Ledger tab - Prepare journal entries for each transaction. Cash Dividends tab - Calculate the amount of each cash dividend Stock Dividend tab - Calculate the amount of retained earnings to be capitalized.

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Answer 1

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Part 1					Part 2
					Cash
Jan 5	Retained Earning (40,000*$0.50)	$     20,000			Date	Debit	Credit	Balance
	Dividend Payable		$      20,000		Beginning			$     848,000
					Jan 10		$      20,000	$     828,000
Jan 10	Dividend Payable	$     20,000			Mar 20		$      30,000	$     798,000
	Cash		$      20,000		Apr 10		$      18,500	$     779,500
					Jul 10		$      18,500	$     761,000
Mar 20	Treasury Shares	$     30,000			Oct 10		$      22,200	$     738,800
	Cash		$      30,000
Apr 5	Retained Earning [(40,000-3,000)*$0.50)]	$     18,500
	Dividend Payable		$      18,500		Paid in capital, common
					Date	Debit	Credit	Balance
Apr 10	Dividend Payable	$     18,500			Beginning			$     120,000
	Cash		$      18,500		Jul 31		$      59,200	$     179,200
Jul 5	Retained Earning [(40,000-3,000)*$0.50)]	$     18,500
	Dividend Payable		$      18,500		Income Summary
					Date	Debit	Credit	Balance
Jul 10	Dividend Payable	$     18,500			Dec 31		$   248,000	$     248,000
	Cash		$      18,500		Dec 31	$   248,000		$                 -
Jul 31	Retained Earning [(40,000-3,000)*20%]*$12	$     88,800
	Common Stock distributable		$      29,600		Common Stock
	Paid in capital in excess of par-Common [(40,000-3,000)*20%]*$8		$      59,200		Date	Debit	Credit	Balance
					Beginning			$     160,000
Aug 14	Common Stock distributable	$     29,600			Aug 14		$      29,600	$     189,600
	Common Stock		$      29,600
					Retained Earning
Oct 5	Retained Earning [(40,000-3,000+7,400)*$0.50)]	$     22,200			Date	Debit	Credit	Balance
	Dividend Payable		$      22,200		Beginning			$     320,000
					Jan 5	$      20,000		$     300,000
Oct 10	Dividend Payable	$     22,200			Apr 5	$      18,500		$     281,500
	Cash		$      22,200		Jul 5	$      18,500		$     263,000
					Jul 31	$      88,800		$     174,200
Dec 31	Income Summary	$ 248,000			Oct 5	$      22,200		$     152,000
	Retained Earning		$   248,000		Dec 31 (Balancing)		$   248,000	$     400,000
	(To close income summary account)
	Part 3 Trial Balance
	Cash	$ 738,800
	Common Stock		$   189,600
	Paid in capital Common		$   179,200
	Retained earning		$   400,000
	Treasury Stock	$     30,000
	Total	$ 768,800	$   768,800
	Part 4
		Jan 5	Apr 5	Jul 5	Oct 5
	Common Shares outstanding	40,000	37,000	37,000	44,400
	Dividend per share	$         0.50	$          0.50	$        0.50	$                                  0.50
	Total Dividend	$     20,000	$      18,500	$   18,500	$                             22,200
	Part 5
	No of shares outstanding July 30		37,000
	Percentage of stock dividend		20%
	No of shares to be issued		7,400
	Amount to be capitalized per share		$              12
	Total amount to be capitalized		$      88,800