Question

On January 1, 2020, Agassi Corporation had the following stockholders' equity accounts. Common Stock ($10 par value, 70,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $700,000 500,000 617,000 During 2020, the following transactions occurred. Jan. 15 Declared and paid a $1.05 cash dividend per share to stockholders. Declared and paid a 10% stock dividend. The market price of the stock was $14 per share. Reacquired 1,800 common shares at a market price of $16 per share. Apr. 15 May 15 Reissued 900 shares held in treasury at a price of $18 per share. Determined that net income for the year was $377,000. Nov. 15 Dec. 31 Journalize the above transactions. (Include entries to close net income to Retained Earnings.) (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.) Debit Credit Account Titles and Explanation Date

Answer 1

Credit Agassi Corporation Date Account 15-Jan Cash Dividends Cash Debit 73,500 Calculation =70,000*1.05 73,500 98,000 15-Apr Stock Dividends Common Stock Paid-in Capital in Excess of Par-Common Stock =70,000*10%*14 =70,000*10%*10 70,000 28,000 28,800 =1,800*16 15-May Treasury Stock Cash 28,800 16,200 15-Nov Cash Treasury Stock Paid-in Capital from sale of Treasury Stock =900*18 =900*16 14,400 1,800 377,000 31-Dec Income Summary Retained Earnings 377,000 171,500 31-Dec Retained Earnings Cash Dividends Stock Dividends 73,500 98,000 Paid in Capital Retained Earnings Stockholders Equity 1,299,800 822,500 2,107,900

Req3 Ratios Payout Ratio Dividends paid / Net Income =(73,500+98,000)/377,000 45.49% Payout Ratio Return on common stockholders equity Net Income / Average Common Equity =377,000/ ((2,107,900+1,817,000)/2) 19.21% Return on common stockholders equity

WORKINGS
Agassi Corporation T Accounts Date Debit Date Credit Common Stock 1-Jan $ 700,000 15-Apr $ 70,000 Date Debit Date Credit Paid-in Capital in Excess of Par-Common Stock 1-Jan $ 500,000 15-Apr $ 28,000 Date Debit Date Credit Paid-in Capital from sale of Treasury Stock 15-Nov $ 1,800 Date Debit Date Credit Treasury Stock 15-May $ 28,800 15-Nov $ 14,400 528,000 1,800 Bal. $ 14,400 Bal. $ 170,000 Retained Earnings 98,000 1-Jan $ 617,000 73,500 31-Dec $ 377,000 Bal. $ Cash Dividends $ 73,500 31-Dec $ Bal. $ Stock Dividends 98,000 31-Dec $ 15-Jan 15-Apr $ 31-Dec $ 31-Dec $ 73,500 98,000 Bal. $ 822,500 Bal. Bal.

Partial Balance Sheet 31-Dec-20 1-Jan-20 700,000 500,000 Stockholders Equity Paid in Capital Common Stock ($10 par value, 77,000 shares issued and 76,100 shares outstanding) Paid-in Capital in Excess of Par-Common Stock Paid-in Capital from sale of Treasury Stock Total Paid in Capital Retained Earnings Treasury Stock (900 shares @ $16 per share) Total Stockholders Equity 770,000 528,000 1,800 1,299,800 822,500 (14,400) 2,107,900 1,200,000 617,000 1,817,000 Workings Opening Common Shares 10% Stock Dividends Number of Common Shares Issued Treasury stock purchased Treasury stock reissued Number of Common Shares 0/s 70,000 7,000 77,000 (1,800) 900 76,100