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Retained Earnings: Transactions and Statement

The stockholders equity of Elson 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 valuePreferred stock	40,000
Paid-in capital in excess of par valueCommon 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 $14 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 $15 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 90 cents 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 $265,000.

Do not use negative signs with your answers.

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