ook Show Me How Calculator Entries for stock dividends Chart

ook Show Me How Calculator Entries for stock dividends Chart of Accounts Journal Final Questions Instructions Advanced Life Co. is an HMO for businesses in the Portland area The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (1,000,000 shares authorized, 480,000 shares issued), $4 par, $1,920,000, Paid-in capital in excess of par common stock, $800,000, and Retained eaminas S34 350,000 The board of dre tors declared a 3% s ock dvidend when the market price of he stock was S 13 a share. Advanced Lie co reported no income or loss for the current year Required: A Journalize the entries to record (1) the declaration of the dividend on December 1, capitailizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles B. Determine the following amounts before the stock dividend was declared: (t) total paid-in capital, (2) total retained earnings, and (3) total C. Determine the following amounts after the stock dividend was deciared and closing entries were recorded at the end of the year. (1) total paid- in capital, (2) total retained earnings, and (3) total stockhoiders\' equity

Solution

Answer:

1

Journal Entry for the issue and payment of the dividend

Date

Description

Debit $

Credit $

1-Dec

Stock dividend
(480,000*3%*13)

187200

Common stock Dividend Distributable
(480,000*3%*4)

57600

paid in capital In excess of par-Common
(480,000*3%*9)

129600

31-Dec

Common stock Dividend Distributable

57600

Common stock-$4 par

57600

______________________________________

2

Balancesheet (partial)

AS on dec-1

Paid in capital

Common stock .$4 par value, 1,000,000 authorized and 480,000 issued

1,920,000

paid in capital In excess of par-Common

800,000

Total paid in capital

2,720,000

Add:

Retained earning

34,350,000

Total Stock holder\'s equity

37,070,000

Total paid in capital

2720000

Retained earning

34350000

Total Stock holder\'s equity

37070000

____________________________________________

3

Balance sheet (partial)

AS on dec-31

Paid in capital

Common stock .$4 par value, 1,000,000 authorized and 480,000 issued

1,977,600

paid in capital In excess of par-Common

929,600

Total paid in capital

2,907,200

Add:

Retained earning(34350,000-187200)

34,162,800

Total Stock holder\'s equity

37,070,000

Total paid in capital

2907200

Retained earning

34162800

Total Stock holder\'s equity

37070000

Date	Description	Debit $	Credit $
1-Dec	Stock dividend (480,000*3%*13)	187200
	Common stock Dividend Distributable (480,000*3%*4)		57600
	paid in capital In excess of par-Common (480,000*3%*9)		129600
31-Dec	Common stock Dividend Distributable	57600
	Common stock-$4 par		57600