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a company has the following at January 1, 2018 2,000,000 shares of common stock issued and...

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Accounting

a company has the following at January 1, 2018

2,000,000 shares of common stock issued and $1 par outstanding4,000,000 shares authorized

Additional paid in capital $5,750,000

retained earnings $12,345,000

During 2018 the following happened

Net income: $6,789,000

cash dividend declared May 15: $.70 per share

cash dividends paid on Jun 30th

stock dividends declared on November 30th : 17%

stock dividend distributed on 12/31

the market price of the stock has been $36 all year

Prepare journal entries to record cash and stock dividends

prepare a owners equity section of the balance sheet of12/31/2018

Answer & Explanation Solved by verified expert
4.4 Ratings (835 Votes)

Journal entries

Date Title Debit Credit
15-May Cash dividends ($0.70*2,000,000) $    1,400,000
Dividend payable $    1,400,000
(To record declaration of cash dividend)
30-Jun Dividend payable $    1,400,000
Cash $    1,400,000
30-Nov Stock dividends (2,000,000*17%*$36) $ 12,240,000
Dividend distributable (2,000,000*17%*$1) $        340,000
Additional paid in capital $ 11,900,000
(To record declaration of stock dividend))
12-Dec Dividend distributable $        340,000
Common stock $        340,000
(To record issue of stock dividend)
Stockholders equity
As at 31 December 2018
Paid-in capital
Common stock, $1 par, 4,000,000 shares authorised, 2,340,000 shares issued and outstanding $    2,340,000
Additional paid in capital - Common stock ($5,750,000+$11,900,000) $ 17,650,000
Total paid in capital $ 19,990,000
Retained earnings ($12,345,000+$6,789,000-$1,400,000-$12,240,000) $    5,494,000
Total stockholders equity $ 25,484,000

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