PRINTER VERSION BAC Problem 117A Part Level Submission On Ja

PRINTER VERSION BAC Problem 11-7A (Part Level Submission) On January 1, 2017, Primo Corporation had the following stockholders\' equity accounts Common Stock ($10 par value, 75,000 shares issued and outatanding) $750,000 Paid-in Capital in Excess of Par Value-Common Stock Retained Earnings 200,000 540,000 During the year, the following transactions occurred Jan. 15 Declared a $1 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 10% stock dividend to stockholders of record 30, distributable May 15. On April 15, the market price of the stock was $14 per share. stock dividend. uly 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $15. (The new par value is $5.) bec. 1 Declared a so.6 per share cash dividend to stockholders ofcod on ecember 15, payable January 10, 2018. Dec. 31 Determined that net income for the year was $250,000.

Solution

Date Account Tittles and Explaination Debit Credit Jan-15 Cash dividend ($1 X 75,000) $     75,000 Dividend payable $     75,000 Feb-15 Dividend payable $     75,000 Cash $     75,000 Apr-15 Stock dividends (75,000 X 10%) X $14 $ 1,05,000 Common stock dividend distributable (75,000 X 10%) X $10 $     75,000 Paid-in capital in excess of par value $     30,000 May-15 Common stock dividend distributable $     75,000 Common stock $     75,000 Jul-01 No Entry No Entry (Note : 2 for 1 stock split increases the number of shares to (75,000 + 7,500) X 2 = 1,65,000 and reduces the par value to $5 per share) Dec-01 Retained earnings (1,65,000 X $0.60) $     99,000 Dividend Payable $     99,000 Dec-31 Income Summary $ 2,50,000 Retained Earnings $ 2,50,000 Dec-31 Retained Earnings $     75,000 Cash dividend $     75,000 Dec-31 Retained Earnings $ 1,05,000 Stock dividend $ 1,05,000