Homework SourseThe balance sheet of Consolidated Paper Inc included the fol
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2015:
Prepare the appropriate entries for these events. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.)
On March 3 the board of directors declared a property dividend of 265,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $772,000). The investment shares had a fair value of $3 per share and were distributed March 31 to shareholders of record March 15.
On May 3 a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $12 per share.
On July 5 a 2% common stock dividend was declared and distributed. The market value of the common stock was $12 per share.
On December 1 the board of directors declared the 8.0% cash dividend on the 93,000 preferred shares, payable on December 28 to shareholders of record December 20.
On December 1 the board of directors declared a cash dividend of $0.50 per share on its common shares, payable on December 28 to shareholders of record December 20.
| The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2015: |
Solution
Journal Entries Date Particulars Debit Credit Mar-03 Investment in Leaseco International Stock $ 23,000.00 Gain on Investment $ 23,000.00 Mar-03 Retained Earnings $ 7,95,000.00 Property dividends Payable $ 7,95,000.00 Mar-15 No Journal Entry Required - - Mar-31 Property dividends Payable $ 7,95,000.00 Investment in Leaseco International Stock $ 7,95,000.00 May-03 Paid in Capital- Excess of par, Common $ 1,07,500.00 Common Stock $ 1,07,500.00 Jul-05 Retained Earnings $ 1,29,000.00 Common Stock $ 10,750.00 Paid in Capital- Excess of par, Common $ 1,18,250.00 Dec-01 Retained earnings $ 7,440.00 Cash Dividend Payable $ 7,440.00 Dec-20 No Journal Entry - - Dec-28 Cash Dividend Payable $ 7,440.00 Cash $ 7,440.00 Dec-01 Retained earnings $ 2,74,125.00 Cash Dividend Payable $ 2,74,125.00 Dec-20 No Journal Entry - - Dec-28 Cash Dividend Payable $ 2,74,125.00 Cash $ 2,74,125.00 Working Notes Mar-03 Gain on Investment ($7,95,000-$7,72,000) = $ 23,000.00 Retained Earnings 2,65,000 shares at $3 per share May-03 Common stock = $ 1,07,500.00 25% 0f (4,34,300-4,300) at $1 par. Jul-05 Retained Earnings (10750*$12) = $ 1,29,000.00 Common stock (10750* $1 per share) = $ 10,750.00 *2% of (4,30,000+1,07,500) = 10750 additional Shares Dec-01 Cash Dividend Payable ($ 93,000 par *8%) = $ 7,440.00 Dec-01 Cash Dividend Payable (5,48,250*$0.50) = $ 2,74,125.00 *4,30,000+1,07,500+10,750 = 5,48,250 Consolidated Paper, Inc. [shareholders\' equity section} December 31, 2016 Paid In Capital: Preferred Stock $ 7,440.00 Common Stock $ 5,52,550.00 Paid in Capital- Excess of par, Preferred $ 15,45,000.00 Paid in Capital- Excess of par, Common $ 26,05,750.00 Retained earnings : Retained earnings $ 88,69,435.00 Treasury stock $ -43,000.00 Total Shareholder\'s Equity $ 1,35,37,175.00 Working Notes Preferred Stock (8% of $93,000 at par) $ 7,440.00 Common Stock 5,52,550 shares at $1 par $ 5,52,550.00 **4,34,300+1,07,500+10,750 = 5,52,550 Treasury stock at cost 4,300 common shares $ -43,000.00 Paid in Capital- Excess of par, Common $ 26,05,750.00 (25,95,000-1,07,500+1,18,250) Retained earnings (92,45,000-7,95,000-1,29,000-7,440-2,74,125+8,30,000) $ 88,69,435.00
