Homework SourseProblem 117A Part Level Submission On January 1 2019 Larkspu
Problem 11-7A (Part Level Submission) On January 1, 2019, Larkspur, Inc. had the following stockholders\' equity accounts.
Common Stock ($10 par value, 78,300 shares issued and outstanding) $783,000
Paid-in Capital in Excess of Par Value-Common Stock 199,000
Retained Earnings 593,000
During the year, the following transactions occurred.
Jan. 15 Declared a $1.10 cash dividend per share to stockholders of record on January 31, payable
February 15. Feb. 15 Paid the dividend declared in January.
Apr. 15 Declared a 5% stock dividend to stockholders of record on April 30, distributable
May 15. On April 15, the market price of the stock was $16 per share. May 15 Issued the shares for the stock dividend.
July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $14. (The new par value is $5.)
Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2020.
Dec. 31 Determined that net income for the year was $225,000.
a)Journalize the transactions and the closing entries for net income and dividends.
FYI
| Jan. 15 | Cash Dividends | (78,300 × $1.10) | $86,130 |
| Apr. 15 | Stock Dividends | (3,915 × $16) | $62,640 |
| Common Stock Dividends Distributable | (3,915 × $10) | $39,150 | |
| Paid-in Capital in Excess of Par-Common Stock | (3,915 × $6) | $23,490 | |
| July 1 | Memo - two-for-one stock split increases number of shares to 164,430 | ||
| = (82,215 × 2) and reduces par value to $5 per share. | |||
| Dec. 1 | Cash Dividends | (164,430 × $0.50) | $82,215 |
| Dec. 31 | Retained Earnings | ($39,150 + $82,215) | $168,345 |
Solution
Answers
Date
Accounts title
Debit
Credit
Jan-15
Dividends
$ 86,130.00
Cash
$ 86,130.00
(cash dividend paid)
Apr-15
Dividends
$ 62,640.00
Dividend distributable
$ 62,640.00
(stock dividend declared)
May-15
Dividend distributable
$ 62,640.00
Common Stock
$ 39,150.00
Paid in Capital in excess of Par - Common Stock
$ 23,490.00
(stock dividend distributed)
Jul-01
NO ENTRY
Dec-01
Dividends
$ 82,215.00
Cash
$ 82,215.00
(cash dividend paid)
Dec-31
Retained Earnings
$ 168,345.00
Dividends
$ 168,345.00
(dividend account closed)
Dec-31
Income Summary
$ 225,000.00
Retained Earnings
$ 225,000.00
(Net Income closed)
| Date | Accounts title | Debit | Credit |
| Jan-15 | Dividends | $ 86,130.00 | |
| Cash | $ 86,130.00 | ||
| (cash dividend paid) | |||
| Apr-15 | Dividends | $ 62,640.00 | |
| Dividend distributable | $ 62,640.00 | ||
| (stock dividend declared) | |||
| May-15 | Dividend distributable | $ 62,640.00 | |
| Common Stock | $ 39,150.00 | ||
| Paid in Capital in excess of Par - Common Stock | $ 23,490.00 | ||
| (stock dividend distributed) | |||
| Jul-01 | NO ENTRY | ||
| Dec-01 | Dividends | $ 82,215.00 | |
| Cash | $ 82,215.00 | ||
| (cash dividend paid) | |||
| Dec-31 | Retained Earnings | $ 168,345.00 | |
| Dividends | $ 168,345.00 | ||
| (dividend account closed) | |||
| Dec-31 | Income Summary | $ 225,000.00 | |
| Retained Earnings | $ 225,000.00 | ||
| (Net Income closed) |
