Question

On January 1, 2020, Sunland Corporation had the following stockholders' equity accounts. Common Stock ($24 par value, 65,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,560,000 191,000 591,000 During the year, the following transactions occurred. Feb. 1 Mar. 1 Apr. 1 July 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1. Paid the dividend declared in February. Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36. Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $14 per share. Issued the shares for the stock dividend. Declared a $0.30 per share dividend to stockholders of record on December 15, payable January 5, 2021. Determined that net income for the year was $328,000. 31 Dec. 1 31 Journalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Fepli Cash Dividends 25,000 Dividends payable Marlo Dividends Tayable 10.000 Cash 65.000 Apr1: No Entry No Entry Julyd Stock Dividends! Pd. in cap. in Excess I Common Stock Dividends, July 31 Common Stock Dividends.

Answer 1

Credit Sunland Corporation Date Account 1-Feb Cash Dividends Dividends Payable Debit 65,000 Calculation =65,000*1 65,000 65,000 1-Mar Dividends Payable Cash 65,000 1-Apr No Entry In 2 for 1 split, no. of shares doubles to 130,000 (65,000*2) & par value per share halves to $12 ($24/2) 182,000 1-Jul Stock Dividends Common Stock Dividend Distributable Paid in Capital in Excess of Par-Common Stock =13,000*14 =13,000*12 156,000 26,000 156,000 31-Jul Common Stock Dividend Distributable Common Stock 156,000 42,900 Below wkgs 1-Dec Cash Dividends Dividends Payable 42,900 328,000 31-Dec Income Summary Retained Earnings 328,000 182,000 31-Dec Retained Earnings Stock Dividends 182,000 107,900 =65,000+42,900 31-Dec Retained Earnings Cash Dividends 107,900 Workings Cash Dividends Opening Shares Stock Split - 2 for 1 Subtotal 10% Stock Dividend Number of Common Shares Issued Cash Dividend per share Cash Dividend Declared 65,000 65,000 130,000 13,000 143,000 0.30 42,900 =130,000*10% =143,000*0.30

Sunland Corporation T Accounts Date Explanation Debit Credit Balance Common Stock 1-Jan Balance $1,560,000 31-Jul Stock dividends issued $ 156,000 $1,716,000 Paid in Capital in excess of Par-Common Stock 1-Jan Balance $ 191,000 1-Jul Stock dividends declared $ 26,000 $ 217,000 Date Explanation Debit Credit Balance Common Stock Dividend Distributable 1-Jul Stock dividends declared $ 156,000 $156,000 31-Jul Stock dividends issued $156,000 Retained Earnings 1-Jan Balance $591,000 31-Dec Net income $328,000 $919,000 31-Dec Closing entry - dividends $182,000 $ 737,000 31-Dec Closing entry - dividends $ 107,900 $629,100 Stock Dividends 1-Jul Stock dividends declared $182,000 $182,000 31-Dec Closing entry - dividends $ 182,000 $ Cash Dividends 1-Feb Cash dividends declared $ 65,000 1-Dec Cash dividends declared $ 42,900 31-Dec Closing entry - dividends $ 65,000 $ 107,900 $ $ 107,900

Sunland Corporation Balance Sheet (Partial) Dec 31, 2017 Stockholders Equity Paid in Capital Capital Stock Common Stock Additional Paid in Capital Paid in Capital in Excess of Par - Common Stock Total Paid in Capital Retained Earnings Total Stockholders Equity 1,716,000 217,000 1,933,000 629,100 2,562,100