Question

Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2021–2023. At December 31, 2020, the corporation’s accounts included:

	($ in thousands)
Common stock, 104 million shares at $1 par	$	104,000
Paid-in capital—excess of par		618,000
Retained earnings		830,000

1. November 1, 2021, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
2. On March 1, 2022, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $1.8 million, but were purchased two years previously for $1.6 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
3. On July 12, 2022, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $22 per share). Cash was paid in lieu of fractional shares representing 200,000 equivalent whole shares.
4. On November 1, 2022, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
5. On January 15, 2023, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $23 per share.
6. On November 1, 2023, the board of directors declared a cash dividend of $0.35 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.

Required:
1. Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions.
2. Prepare comparative statements of shareholders’ equity for Branch-Rickie for the three-year period ($ in 000s). Net income was $350 million, $415 million, and $475 million for 2021, 2022, and 2023, respectively.

No	Date	General Journal	Debit	Credit
1	November 01, 2021	Retained earningsselected answer correct	52,000,000selected answer correct	not attempted
		Cash dividends payableselected answer correct	not attempted	52,000,000selected answer correct
2	November 15, 2021	No journal entry requiredselected answer correct	not attempted	not attempted
3	December 01, 2021	Cash dividends payableselected answer correct	52,000,000selected answer correct	not attempted
		Cashselected answer correct	not attempted	52,000,000selected answer correct
4	March 01, 2022	Investment in equity securitiesselected answer correct	200,000selected answer correct	not attempted
		Gain on investmentsselected answer correct	not attempted	200,000selected answer correct
5	March 01, 2022	Retained earningsselected answer correct	1,800,000selected answer correct	not attempted
		Property dividends payableselected answer correct	not attempted	1,800,000selected answer correct
6	March 13, 2022	No journal entry requiredselected answer correct	not attempted	not attempted
7	April 05, 2022	Property dividends payableselected answer correct	1,800,000selected answer correct	not attempted
		Investment in equity securitiesselected answer correct	not attempted	1,800,000selected answer correct
8	July 12, 2022	Retained earningsselected answer correct	96,800,000selected answer incorrect	not attempted
		Common stockselected answer correct	not attempted	5,000,000selected answer correct
		Paid-in capital - excess of parselected answer correct	not attempted	100,000,000selected answer incorrect
		Cashselected answer correct	not attempted	4,400,000selected answer correct
9	November 01, 2022	Retained earningsselected answer correct	not attempted	4,400,000selected answer incorrect
		Cash dividends payableselected answer correct	not attempted	not attempted
10	November 15, 2022	No journal entry requiredselected answer correct	not attempted	not attempted
11	December 01, 2022	Cash dividends payableselected answer correct	not attempted	not attempted
		Cashselected answer correct	not attempted	not attempted

BRANCH-RICKIE CORPORATION
Statement of Shareholders' Equity
For the Years Ended Dec. 31, 2021, 2022, and 2023 ($ in thousands)
	Common Stock	Additional Paid-in Capital	Retained Earnings	Total Shareholders' Equity
Jan. 1, 2021	$104,000selected answer correct	$618,000selected answer correct	$830,000selected answer correct	not attempted
Net income	not attempted	not attempted	not attempted	not attempted
Cash dividends	not attempted	not attempted	not attempted	not attempted
Dec. 31, 2021	104,000	618,000	830,000	0
Property dividends	not attempted	not attempted	not attempted	not attempted
Common stock dividend	not attempted	not attempted	not attempted	not attempted
Net income	not attempted	not attempted	not attempted	not attempted
Cash dividends	not attempted	not attempted	not attempted	not attempted
Dec. 31, 2022	104,000	618,000	830,000	0
3-for-2 split effected in the form of a stock dividend	not attempted	not attempted	not attempted	not attempted
Net income	not attempted	not attempted	not attempted	not attempted
Cash dividends	not attempted	not attempted	not attempted	not attempted
Dec. 31, 2023	$104,000	$618,000	$830,000	$0

Answer 1

Solution ;

	Date	Particulars	Debit	Credit
1	November 1, 2021	Retained earning a/c	52000,000
		To Divident payable		52000,000
		( To record declaration of divident ) 104,000,000*0.50
2	November 15 ,2021	No entry required
3	December 01,2021	Divident payable a/c	52000,000
		To Cash		52000,000
		(To record payment of divident)
4	March 01,2022	Investment in warner bond	200,000
		To Gain on appreciation on      investment		200,000
		(To record appreciation on investment)1.8M - 1.6M
5	March 01,2022	Retained earnings	1800000
		To Property divident payable		1800000
		(To record declaration of property divident)
6	March 13, 2022	No entry required
7	April 5 ,2022	Property divident payable a/c	1800,000
		To Investment in warner bond		1800,000
		(To record payment of property divident)
8	July 12, 2022	Retained earnings (5200,000*22)	114400,000
		To Common stock		5000,000*
		To Paid in excess of par (5000,000*21)		105000,000
		To Cash(200,000*22)		4400,000
		(to record declaration and payment of stock divident)
9	November 01, 2022	*Retained earnings (109000,000*0.50	54500,000
		To Divident payable		54500,000
		(To record declaration of divident)
10	November 15, 2022	No entry required
11	December 01 , 2022	Divident payable	54500,000
		To Common stock		54500,000
		(To record payment of divident)
12	January 15 , 2023	Retained earnings	54500,000
		To Common stock		54500,000*
		(To record declaration and distribution of stock divident)
13	November 01, 2023	*Retained earnings (163500,000*0.35)	57225000
		To Divident payable		57225000
		(To record declaration of divident)
14	November 15,2023	No entry required

15	December 01,2023	Divident payable	57225000
		To cash		57225000
		(To record payment of divident)

Working note *

1. Common stock divident                5%

   Number of shares outstanding               104000,000

   Stock divident (104000,000 * 5%)             5200,000

Cash issued for fractional shares               200,000

therefore ,(5200,000- 200,000) shares will be distributed            5000,000

2. Number of shares outstanding before stock divident                 104000,000

    Add. Common shares distributed for stock divident                      5000,000

            Total shares outstanding                                                 109000,000

3. Stock divident %                                            50%

   Commonshares outstanding                         109000,000

Stock divident (109000,000*50%)                       54500,000

4. Common stock shares outstanding               109000,000

    Add. Stock divident transaction (in 3)               54500,000

    Common stock shares outstanding                163500,000

                              BRANCH - RICKIE CORPORATION

                     Statement of Shareholder's equity

                       For the year ended Dec 31, 2021 ,2022 , 2022

	Common stock	Additional paid in capital	Retained earnings	Total shareholder's equity
Jan 1, 2021	104000,000	618000,000	830000,000	1552000,000
Net income			350,000,000	350,000,000
Cash dividents			(52000,000)	(52000,000)
Dec 31, 2021	104000,000	618000,000	1128000,000	1850,000,000
Property Divident			(1800,000)	(1800,000)
Commonstock divident	5000,000	105000,000	(114400,000)	(4400,000)
Net income			415000,000	415000,000
Cash divident			(54500,000)	(54500,000)
Dec 31, 2022	109000,000	723000,000	1372300,000	2204300,000
3 for 2 split effect in the form of a stock divident	54500,000		(54500,000)	-
Net income			475000,000	475000,000
Cash divident			(57225000)	(57225000)
Dec 31, 2023	163500,000	723000,000	173,557,5000	2622075,000