Retained Earnings: Transactions and Statement
The stockholders’ equity of Elsworth Corporation at January 1 is shown below:
5 Percent preferred stock, $100 par value, 10,000 shares authorized; | |
4,000 shares issued and outstanding | $400,000 |
Common stock, $5 par value, 200,000 shares | |
authorized; 50,000 shares issued and outstanding | $250,000 |
Paid-in capital in excess of par value—Preferred stock | 40,000 |
Paid-in capital in excess of par value—Common stock | 300,000 |
Retained earnings | 656,000 |
Total Stockholders’ Equity | $1,646,000 |
The following transactions, among others, occurred during the year:
Apr. | 1 | Declared a 100 percent stock dividend on all outstanding shares of common stock. The market value of the stock was $16 per share. |
15 | Issued the stock dividend declared on April 1. | |
Dec. | 7 | Declared a two percent stock dividend on all outstanding shares of common stock. The market value of the stock was $18 per share. |
17 | Issued the stock dividend declared on December 7. | |
20 | Declared the annual cash dividend on the preferred stock and a cash dividend of $1.20 per common share, payable on January 15 to common stockholders of record on December 31. |
Required
a. Prepare journal entries to record the foregoing transactions.
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
Apr.01 | AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer |
AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer | |
Declared stock dividend on common stock. | |||
Apr.15 | AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer |
AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer | |
Issued common shares as common stock declared as a dividend. | |||
Dec.07 | AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer |
AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer | |
Paid-in-Capital in Excess of Par Value - Common Stock. | Answer | Answer | |
Declared a cash dividend on common stock outstanding. | |||
Dec.17 | AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer |
AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer | |
Issued Shares of common stock declared as a dividend. | |||
Dec.20 | AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer |
AnswerStock DividendsStock Dividends DistributableCommon StockCash DividendsDividends Payable - Preferred StockDividends Payable - Common Stock | Answer | Answer | |
Dividends Payable - Common Stock | Answer | Answer | |
Declared cash dividend on preferred and common stock. |
b. Prepare a statement of retained earnings. Net income for the year is $300,000.
Do not use negative signs with your answers.
ELSWORTH CORPORATION Statement of Retained Earnings For the Year Ended December 31 |
|||
---|---|---|---|
Retained Earnings, January 1 | Answer | ||
AnswerNet IncomeRetained Earnings, December 31Cash Dividends Declared | Answer | ||
Answer | |||
AnswerNet IncomeRetained Earnings, December 31Cash Dividends Declared | Answer | ||
Stock Dividends Declared | Answer | Answer | |
AnswerNet IncomeRetained Earnings, December 31Cash Dividends Declared | Answer |
a.
General Journal | |||
Date | Description | Debit | Credit |
Apr. 01 | Stock dividends (100% x 50000 x $5) | 250000 | |
Stock dividends distributable | 250000 | ||
Declared stock dividend on common stock. | |||
Apr. 15 | Stock dividends distributable | 250000 | |
Common stock | 250000 | ||
Issued common shares as common stock declared as a dividend. | |||
Dec. 07 | Stock dividends (2% x 100000 x $18) | 36000 | |
Stock dividends distributable (2% x 100000 x $5) | 10000 | ||
Paid-in-Capital in Excess of Par Value - Common Stock | 26000 | ||
Declared a cash dividend on common stock outstanding. | |||
Dec. 17 | Stock dividends distributable | 10000 | |
Common stock | 10000 | ||
Issued Shares of common stock declared as a dividend. | |||
Dec. 20 | Cash dividends | 142400 | |
Dividends Payable - Preferred Stock (5% x $400000) | 20000 | ||
Dividends Payable - Common Stock [$1.20 x (50000 + 50000 + 2000)] | 122400 | ||
Declared cash dividend on preferred and common stock. |
b.
ELSWORTH CORPORATION | ||
Statement of Retained Earnings | ||
For the Year Ended December 31 | ||
Retained Earnings, January 1 | 656000 | |
Net income | 300000 | |
956000 | ||
Cash dividends declared | 142400 | |
Stock dividends declared | 286000 | 428400 |
Retained Earnings, December 31 | 527600 |
Retained Earnings: Transactions and Statement The stockholders’ equity of Elsworth Corporation at January 1 is shown...
Retained Earnings: Transactions and
Statement
The stockholders’ equity of Ranger Corporation at January 1
appears below:
Common stock, $10 par value, 200,000 shares authorized;
80,000 shares issued and outstanding
$800,000
Paid-in capital in excess of par value
480,000
Retained earnings
305,000
During the year, the following transactions occurred:
May
12
Declared a 15 percent stock dividend; market value of the
common stock was $22 per share.
June
6
Issued the stock dividend declared on May 12.
Dec.
5
Declared a...
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