Question

Problem 14-01A a-c (Part Level Submission) (Video) On January 1, 2020, Sandhill Corporation had the following stockholders' equity accounts. Common Stock ($20 par value, 63,500 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,270,000 197,000 564,000 During the year, the following transactions occurred. Feb. 1 Mar. 1 Apr. 1 July 1 31 Dec. 1 31 Declared a $2 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 $38. Declared a 15% 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. Issued the shares for the stock dividend. Declared a $0.60 per share dividend to stockholders of record on December 15, payable January 5, 2021. Determined that net income for the year was $300,500.

Please complete both parts & include a stockholder's equity section at December 31st. Thank You

Answer 1

Credit Sandhill Corporation Date Account 1-Feb Cash Dividends Dividends Payable Debit 127,000 Calculation =63,500*2 127,000 127,000 1-Mar Dividends Payable Cash 127,000 1-Apr No Entry in 2 for 1 split, no. of shares doubles to 127,000 (63,500*2) & par value per share halves to $10 ($20/2) 285,750 1-Jul Stock Dividends Common Stock Dividend Distributable Paid in Capital in Excess of Par-Common Stock =19,050*15 =19,050*10 190,500 95,250 190,500 31-Jul Common Stock Dividend Distributable Common Stock 190,500 87,630 Below wkgs 1-Dec Cash Dividends Dividends Payable 87,630 300,500 31-Dec Income Summary Retained Earnings 300,500 285,750 31-Dec Retained Earnings Stock Dividends 285,750 214,630 =127,000+87,630 31-Dec Retained Earnings Cash Dividends 214,630 Workings Cash Dividends Opening Shares Stock Split - 2 for 1 Subtotal 15% Stock Dividend Number of Common Shares Issued Cash Dividend per share Cash Dividend Declared 63,500 63,500 127,000 19,050 146,050 0.60 87,630 =127,000*15% =146,050*0.60

Balance Balance Sandhill Corporation T Accounts Date Explanation Debit Credit Common Stock 1-Jan Balance 31-Jul Stock dividends issued $ 190,500 Paid in Capital in excess of Par-Common Stock 1-Jan Balance 1-Jul Stock dividends declared $ 95,250 $ 190,500 $1,270,000 $1,460,500 $ 197,000 $ 292,250 Date Explanation Debit Credit Common Stock Dividend Distributable 1-Jul Stock dividends declared $ 190,500 31-Jul Stock dividends issued $ 190,500 Retained Earnings 1-Jan Balance 31-Dec Net income $ 300,500 31-Dec Stock Dividends $ 285,750 31-Dec Cash Dividends $ 214,630 Stock Dividends 1-Jul Stock dividends declared $285,750 31-Dec Stock Dividends closed to RE $285,750 $564,000 $ 864,500 $578,750 $364,120 Cash Dividends 1-Feb Cash dividends declared $127,000 1-Dec Cash dividends declared $ 87,630 31-Dec Cash Dividends closed to RE $ 127,000 $ 214,630 $ $285,750 $ . $ - $ 214,630

Sandhill Corporation Balance Sheet (Partial) December 31, 2020 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 1,460,500 292,250 1,752,750 364,120 2,116,870