Question

Senior Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (380,000 shares authorized; 3,000 shares issued), $125 par, $375,000; Paid-In Capital in excess of par— common stock, $39,000; and Retained earnings, $4,500,000. The board of directors declared a 2% stock dividend when the market price of the stock was $166 a share. Senior Life Co. reported no income or loss for the current year.

If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown.

a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

	Stock Dividends	$9,960
	Stock Dividends Distributable
	Paid-In Capital in Excess of Par-Common Stock

a2. Journalize the entry to record the issuance of the stock certificates.

	Stock Dividends Distributable
	Common Stock

b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital	$
Total retained earnings	$
Total stockholders' equity	$

c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital	$
Total retained earnings	$
Total stockholders' equity	$

Answer 1

a1.

Stock dividends (3,000*2%*$166)	$9,960
Stock dividends distributable (3,000*2%*$125)		$7,500
Paid in capital in excess of par- Common stock (60*$41)		2,460

a2.

Stock dividends distributable (3,000*2%*$125)	$7,500
Common stock		$7,500

b.

Total paid in capital ($375,000+39,000)	$414,000
Total retained earnings	$4,500,000
Total stockholders equity	$4,914,000

c.

Total paid in capital ($414,000+9,960)	$423,960
Total retained earnings (4,500,000-9,960)	$4,490,040
Total stockholders equity	$4,914,000