Question

Exercise 14-01 b (Essay) On January 1, Guillen Corporation had 95,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $5 per shere. During the year, the following occurred. Apr. 1 Issued 25.000 additional shares of common stock for $17 per share, June 15 Declared a cash dividend of $1 per share to stockholders of record on June 30. July 10 Paid the $1 cash dividend. Dec. 1 issued 2,000 additional shares of common stock for $19 per share. 15 Declared a cash dividend on outstanding shares of $1.20 per share to stockholders of record on December 31 How are dividends and dividends payable reported in the financial statements prepared at December 31

Answer 1

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Guillen Corporation		Note
Number of shares on January 1	95,000.00	A
Add: Issued on April 1	25,000.00	B
Number of shares outstanding on April 1	120,000.00	C=A+B
Dividend per share declared on June 15	1.00	D
Dividend paid on July 10	120,000.00	E=C*D
Number of shares outstanding on April 1	120,000.00	See C
Add: Issued on Dec 1	2,000.00	F
Number of shares outstanding on Dec 1	122,000.00	G=C+F
Dividend per share declared on Dec 15	1.20	H
Dividend payable on Dec 31	146,400.00	I=G*H
Treatment/ Reporting
Total Dividend expense for the year	266,400.00	J= E+I
This amount will be shown in the retained earnings statement. It will be deducted from the retained earnings balance.
Dividend payable on Dec 31	146,400.00	See G
It is a current liability. It will be shown in Balance Sheet.