Question

Problem 14-03A a-d 

On January 1, 2020, Carta Vista Corporation had the following stockholders' equity accounts. 

Common Stock (no par value, 89,000 shares issued and outstanding) $1,450,000 

Retained Earnings 476,000

During the year, the following transactions occurred.  

Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.

Mar. 1 Paid the dividend declared in February

Apr. 1 Announced a 3-for-1 stock split. Prior to the split, the market price per share was $39. 

July 1   Declared a 4% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $10 per share. 

31 Issued the shares for the stock dividend. 

Dec. 1  Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2021 

31 Determined that net income for the year was $334,000.

 Prepare the stockholders' equity section of the balance sheet at March 31. 

Answer 1

1.

CARLA VISTA CORPORATION
Partial Balance Sheet
March 31,2020
Stockholders' Equity
Paid-in Capital
Capital Stock
Common stock	$1,450,000
Retained Earnings	$387,000
Total paid-in capital	$1,837,000

*Retained earnings, Mar 31,2020 = Retained earnings, Jan 1,2020 - Dividends

= $476,000-(89,000 shares x $1)

= $387,000

2.

CARLA VISTA CORPORATION
Partial Balance Sheet
June 30,2020
Stockholders' Equity
Paid-in Capital
Capital Stock
Common stock	$1,450,000
Retained Earnings	$387,000
Total paid-in capital	$1,837,000

*No Change in stockholders' equity due to stockholders' equity.

The only change is 89,000 shares to become 267,000 shares (89,000 x 3).

3.

CARLA VISTA CORPORATION
Partial Balance Sheet
September 30,2020
Stockholders' Equity
Paid-in Capital
Capital Stock
Common stock	$1,556,800
Retained Earnings	$280,200
Total paid-in capital	$1,837,000

*Stock dividend = (267,000 shares x 4% x $10 market rate) = 10,680 x $10 = $106,800

**Common stock, Sept.30,2020 = Common stock, June 30,2020 + Stock dividend

= 1,450,000 + 106,800

= $1,837,000

***Retained earnings, Sept. 30,2020 = Retained earnings, June 30,2020 - Stock dividend

= $387,000 - $106,800

= $280,200

4.

CARLA VISTA CORPORATION
Partial Balance Sheet
December 31,2020
Stockholders' Equity
Paid-in Capital
Capital Stock
Common stock	$1,556,800
Retained Earnings	$280,200
Total paid-in capital	$1,837,000

*Retained Earnings, Dec 31,2020 = Retained earnings, Sept.30,2020 + Net income - Dividends

= $280,200 + 334,000 - (267,000 + 10,680) x $0.50

= $614,200 - $138,840

= $475,360