Question

P14-1B On January 1, 2012, Syed Corporation had the following stockholders' equity accounts. Common Stock ($5 par value, 200,000 shares issued and outstanding) $1,000,000 Paid-in Capital in Excess of Par-Common Stock 200,000 Retained Earnings 840,000 During the year, the following transactions occurred. Declared a $1 cash dividend per share to stockholders of record on January 31, payable February 15. Jan. 15 Feb. Paid the dividend declared in January. 15 Apr. 15 Declared a 10 % stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $15 per share. May 15 Issued the shares for the stock dividend. July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17. (The new par value is $2.50.) Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2013. Determined that net income for the year was $250,000. 31 Instructions (a) Journalize the transactions and the closing entry for net income. (b) Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a stockholders' equity section at December 31 P14-2B

Answer 1

Date	General Journal	Debit	Credit
Jan-15	Cash Dividend (200000*1)	$       200,000
	Dividend Payable		$       200,000
Feb-15	Dividend Payable	$       200,000
	Cash		$       200,000
Apr-15	Stock Dividend (20000*15)	$       300,000
	Common Stock Dividend Distributable (20000*5)		$       100,000
	Paid in Capital in excess of par - Common Stock		$       200,000
May-15	Common Stock Dividend Distributable	$       100,000
	Common Stock		$       100,000
Jul-01	No Entry
Dec-01	Cash Dividend (440000*0.5)	$       220,000
	Dividend Payable		$       220,000
Dec-31	Income Summary	$       250,000
	Retained Earnings		$       250,000
Dec-31	Retained Earnings (200000+220000)	$       420,000
	Cash Dividend		$       420,000
Dec-31	Retained Earnings	$       300,000
	Stock Dividend		$       300,000

Statement of stockholder's equity Common Paid in capital excess of Retained Total stockholder;s stock par value - common earnings equity Beginning balance 1,000,000 200,000 840,000 2,040,000 Jan 15 (200,000) (200,000) Feb 15 Apr 15 200,000 (300,000) (100,000) May 15 100,000 100,000 July 1 Dec 1 (220,000) (220,000) Dec 31 250,000 250,000 Total 1,100,000 400,000 370,000 1,870,000 (Here minus means Debit and Positive sign means credit.) Balance sheet (Partial) Stockholder's equity Common stock ($2.5 par value, 440000 share issued and outstanding) Paid in capital excess of par value - common Retained earnings Total Stockholder's equity 1,100,000 400,000 370,000 1,870,000