Exercise 15-14 The stockholders’ equity accounts of Tamarisk Company have the fo

Question

Exercise 15-14

The stockholders’ equity accounts of Tamarisk Company have the following balances on December 31, 2017.

Shares of Tamarisk Company stock are currently selling on the Midwest Stock Exchange at $36.

Prepare the appropriate journal entries for each of the following cases. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

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Common stock, $10 par, 328,000 shares issued and outstanding $3,280,000 Paid-in capital in excess of par—common stock 1,200,000 Retained earnings 5,720,000

Explanation / Answer

Tamarisk Company

Journal

When stock split takes place, dollar amount for the par value and other components of paid in capital and stockholders' equity do ot change. Hence, no journal entry is needed for stock split. Only a memo entry is needed to note that the number of shares has changed and the par value per share has changed. Hence, no journal entries will be made in case (c)

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No. Accounts title and explanation Debit Credit (a1) Retained earnings 224,000 Common stock dividend distributable 164,000 Paid in capital in excess of par 60,000 (a2) Common stock dividend distributable 164,000 Common stock 164,000 (b1) Retained earnings 3,280,000   Common stock dividend distributable 3,280,000 (b2) Common stock dividend distributable 3,280,000 Common stock 3,280,000 (c1)

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