Exercise 14-7 Before preparing financial staternents for the current year, the c

Question

Exercise 14-7 Before preparing financial staternents for the current year, the chief accountant for Toso Company discovered the following errors in the accounts 1. The dedaration and payment of $51,000 cash dividend was recorded as a debit to Interest Expense $51,000 and a credit to Cash $51,000 2. A 10% stock dividend (1,500 shares) was dedared on the S13 par value stock when the market price per share was S20 The oely entry made was Stock piidende (pr) 3. A 4-for-1 stock split involving the issue of 362,000 shares of $5 par value common stock for 90,500 shares of $20 par value common stock was recorded as a debit to Retained $19,500 and Dividend Payable (Cr.) $19,500. The shares have not been issued Earnings $1,810,000 and a credit to Common Stock $1,810,000

Explanation / Answer

Correcting Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Dividends / Retained Earnings          51,000.00    Interest Expense          51,000.00 2 Stock Dividends          10,500.00 Dividends Payable          19,500.00    Stock Dividend Distributable          19,500.00    Paid in Capital in Excess of Par          10,500.00 3 Common Stock    1,810,000.00    Retained Earnings    1,810,000.00

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