Question

Accounting Principles Homework Problems Chapter 14 1. On January 1, 2020, Smith Corporation had the following balances in the balances in its' stockholders' equity accounts. Common Stock ($10 par value, 120,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,200,000 200,000 600,000 The following transactions occurred during the year. Jan. 1 Declared a $1 cash dividend per share to stockholders of record on January 15, payable February 1. Feb. 1 Paid the dividend declared in January. Mar. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36. June 1 Declared a 10% stock dividend to stockholders of record on June 15, distributable June 30. On June 1 the market price of the stock was $13 per share. 30 Issued the shares for the stock dividend. Dec. 1 Declared a $.50 per share dividend to stockholders of record on December 15, payable January 10, 2016. 31 Determined that net income for the year was $350,000. Instructions a. Journalize the above transactions. b. Journalize the closing entries for net income and dividends. C. Enter the beginning balances in the stockholders' equity accounts and post the above journal entries. (You will need to open additional stockholders' equity accounts as needed.) d. Prepare the stockholders' equity section of the balance sheet as of December 31.

Answer 1

a & b)
Smith Corporation
Date	General,Journal	Debit	Credit
01-Jan	Cash	$       1,20,000.00
	To Dividend Payable		$        1,20,000.00
01-Feb	Dividend Payable	$       1,20,000.00
	To Cash		$        1,20,000.00
01-Mar	No Entry but increase Number of shares=(120000*2)=240000
01-Jul	Stock Dividend(120000*2*10%*$13)	$       3,12,000.00
	To Common Stock dividend distributable		$        2,40,000.00
	To Paid in capital excess of par		$           72,000.00
	(Being amount of Stock Dividend)
31-Jul	Common Stock dividend distributable	$       2,40,000.00
	To Common Stock		$        2,40,000.00
01-Dec	Cash Dividend (240000+24000)=(264000*.50)	$       1,32,000.00
	To Dividend Payable		$        1,32,000.00
31-Dec	Income Summary	$       3,50,000.00
	To Retained Earnings		$        3,50,000.00
31-Dec	Retained Earnings	$       3,12,000.00
	To Stock Dividend		$        3,12,000.00
31-Dec	Retained Earnings	$       2,52,000.00
	To Cash Dividend		$        2,52,000.00
c )
		Common Stock
Date	Particular	Debit	Date	Particular	Credit
31-Dec	Balance c/d	$     14,40,000.00	01-Jan	Balance	$ 12,00,000.00
			31-Jul	Common Stock dividend distributable	$     2,40,000.00
	Total	$     14,40,000.00		Total	$ 14,40,000.00
		Common Stock dividend Distributable
Date	Particular	Debit	Date	Particular	Credit
31-Jul	To Common Stock	$       2,40,000.00	01-Jul	Stock Dividend	$     2,40,000.00
	Total	$       2,40,000.00		Total	$     2,40,000.00
		Paid in capital excess of par
Date	Particular	Debit	Date	Particular	Credit
31-Dec	To Balance C/d	$       2,72,000.00	01-Jan	Balance	$     2,00,000.00
			01-Jul	Stock Dividend	$        72,000.00
	Total	$       2,72,000.00		Total	$     2,72,000.00
		Retained Earnings
Date	Particular	Debit	Date	Particular	Credit
			01-Jan	Balance	$     6,00,000.00
31-Dec	To Stock Dividend	$       3,12,000.00	31-Dec	Net Income	$     3,50,000.00
31-Dec	To Cash Dividend	$       2,52,000.00
31-Dec	Balance	$       3,86,000.00
	Total	$       9,50,000.00		Total	$     9,50,000.00
d)	Smith Corporation
	Stockholder's Equity
	Common Stock(144000 shares @$10)	$     14,40,000.00
	Paid in Capital Excess of Par	$       2,72,000.00
	Retained Earnings	$       3,86,000.00
	Total Stockholder's Equity	$     20,98,000.00