Question

Problem 14-01A a-c (Video) On January 1, 2020, Blossom Corporation had the following stockholders' equity accounts. Common Stock ($26 par value, 55,500 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,443,000 202,000 637,000 During the year, the following transactions occurred. Feb. 1 Declared a $3 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 $35. July 1 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 $15 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.30 per share dividend to stockholders of record on December 15, payable January 5, 2021. 31 Determined that net income for the year was $361,500.

Answer 1

Credit Date Feb. 1 Debit 166,500 Account Titles and Explanation Cash Dividends (55,500 x $ 3) Dividends payable (to record cash dividend payable) 166,500 Mar.1 166,500 Dividends payable Cash (to record payment of dividend) 166,500 Apr.1 No Entry No Entry (No entry required for stock split) July 1 166,500 Stock dividend (11,100 x $ 15) Common stock dividend distributable (11,100 x $ 13) Paid-in Capital in Excess of Par - Common (166,500 -144,300) (to record stock dividend) 144,300 22,200 July 31 144,300 Common stock dividend distributable Common stock (issue of shares for the stock dividend) L 144,300 Dec. 1 36,630 Cash dividends (122,100 $ 0.30) Dividend payable |(to record cash dividend payable) 36,630

361,500 Dec. 31 Income summary Retained earnings (to close net income) 361,500 Dec. 31 166,500 Retained earnings Stock dividend (to close stock dividend) 166,500 Dec. 31 203,130 Retained earnings Cash dividend (to close cash dividend) 203,130 55,500 Working Notes: 1) Number of shares outstanding before stock split Number of shares outstanding After stock split (55,500 × 2/1) Par value before stock split Par value After stock split ($26/2) Stock dividend (111,000 10%) 111,000 26.00 13.00 11,100 2) Number of shares after stock dividend (111,000 + 11,100) 122,100

Ref Debit Credit Common Stock Date Explanation Jan.1 Balance July 31 Balance 1,443,000 1,587,300 144,300 Common Stock Dividends Distributable Date Explanation Ref Debit July 1 July 31 144,300 Credit 144,300 Balance 144,300 Credit Paid-in Capital in Excess of Par - Common Stock Date Explanation Ref Debit Jan.1 Balance July 1 Balance 202,000 224,200 22,200 Ref Debit Credit Retained earnings Date Explanation Jan.1 Balance Dec 31 Net Income Dec 31 Stock dividend Dec 31 Cash dividend 361,500 Balance 637,000 998,500 832,000 628,870 166,500 203,130 Credit Cash Dividends Date Explanation Feb.1 Dec 1 Dec 31 Ref Debit 166,500 36,630 Balance 166,500 203,130 203,130 Credit Stock Dividends Date Explanation July 1 Dec 31 Ref Debit 166,500 Balance 166,500 166,500

BLOSSOM CORPORATION Balance Sheet (Partial) December 31, 2020 Stockholders' Equity Paid in Capital: Capital Stock Common stock ($13 par value, 122,100 shares issued and outstanding) $ Additional Paid-In Capital Paid-in Capital in Excess of Par - Common Stock Total Paid in Capital $ Retained earnings Total Stockholders' Equity $ 1,587,300 224,200 1,811,500 628,870 2,440,370