Question

On January 1, 2020, Whispering Winds Corp. had the following stockholders' equity accounts.

a) Journalize the transactions and the closing entries for net income and dividends. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

On January 1, 2020, Whispering Winds Corp. had the following stockholders' equity accounts. Common Stock ($10 par value, 81,600 shares issued and outstanding) $816,000 Paid-in Capital in Excess of Par-Common Stock 188,000 Retained Earnings 545,000 During the year, the following transactions occurred Declared a $1.00 cash dividend per share to stockholders of record on January 31, payable February 15. Jan. 15 Feb. 15 Paid the dividend declared in January 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. Apr. 15 Issued the shares for the stock dividend. May 15 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $15. (The new par value is $5.) July 1 Declared a $0.70 per share cash dividend to stockholders of record on December 15, payable January 10, 2021 Dec. 1 Determined that net income for the year was $260,000 Dec. 31

Answer 1

Remarks Debit Credit General Journal Date Cash Dividends [81600 shares x $1.00] $81,600 Jan. 15 Dividends Payable $81,600 (To record cash dividends payable) Dividends Payable [Ref: Entry dated Jan. 15] $81,600 Feb. 15 $81,600 Cash (To record cash dividends paid) Stock dividends 81600 shares x 10% x $15 (Market)] 81600 shares x 10% x $10 (Par)] $122,400 Aprl. 15 $81,600 $40,800 Common Stock dividend distributable Paid-in-Capital in Excess of Par - Common Stock (To record stock dividends declared) [Balancing figure] Маy. 15 $81,600 Common Stock dividend distributable [Ref: Apr.15 entry is reversed] $81,600 Common Stock (To record distributed stock dividends declared) No Entry Jul. 1 When 10% stock dividend distributed on May. 15, outstanding # of shares would be: 81600 8160 = 89760. (Stock-split 2-for-1 will increase #of shares outstanding to 179520 (89760 x 2) Cash Dividends Dividends Payable [179520 shares x $0.70] $125,664 Dec. 1 $125,664 (To record cash dividends payable)

$260,000 Income Summary Dec. 31 Retained Earnings $260,000 (To close net income for the year) Retained Earnings I$81600 $125664] $207,264 Dec. 31 Cash Dividends $207,264 [Ref: Entry dated Jan. 15 & Dec. 1] (To close cash dividends) Retained Earnings $122,400 Dec. 31 [Ref: Entry dated Aprl. 15] $122,400 Stock Dividends (To close stock dividends)