Listed below are the transactions th at affected the shareholders\' equity of Br

Question

Listed below are the transactions th at affected the shareholders' equity of Branch-Rickie Corporation during the period 2018-2020, At December 31, 2017, the corporation's accounts included Comon stock. i08 million shares at $1 par Paid-in capital-excess of par Retained earnings (S in 000s) 108, 000 648, 000 870,000 a. November 1, 2018, the board of directors declared a cash dividend of so.90 per share on its common shares, payable to b. On March 1, 2019, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that shareholders of record November 15, to be paid December 1 Branch-Rickie was holding g as an investment. The bonds had a fair value of $2.3 million, but were purchsed two years previously for $2.0 million. Because they were intended to be heid to maturity, the bonds had not been previously written up. The property c, on July 12, 2019, the corporation declared and distributed a 8% common stock dividend (when the market value of the common d. On November 1, 2019, the board of directors declared a cash dividend of $o.90 per share on its common shares, payable to e. On January 15, 2020, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend was payable to shareholders of record March 13, to be distributed April 5 stock was $15 per share). Cash was paid in lieu of fractional shares representing 640,000 equivalent whole shares shareholders of record November 15, to be paid December 1.

Explanation / Answer

1 Journal Entries to record the transactions Amount (in '000) 1-Nov-18 Retained Earnings $97,200 Cash Dividend Payable $97,200 (108 million x 0.90 per share= $97.2 million) 1-Dec-18 Cash Dividend Payable $97,200 Cash $97,200 1-Mar-19 Investment in Warner bonds $300 Gain on Fair value adjustment $300 (2.3million-2.0million=0.3Million) 1-Mar-19 Retained Earnings $2,300 Property Dividend Payable $2,300 5-Apr-19 Property Dividend payable $2,300 Investment in Warner Bonds $2,300 12-Jul-19 Retained Earnings $129,600 Common Stock $8,000 Paid in capital in excess of par $112,000 Cash $9,600 (Cash = 640000 x 15 = $9600000) APIC = 8million x $14 = $112 million Common Stock = 8 million x $1 = $8 million 1-Nov-19 Retained Earnings $104,400 Cash Dividend Payable $104,400 (108+8 million = 116 million x $0.90 = $104.4m) 1-Dec-19 Cash Dividend Payable $104,400 Cash $104,400 15-Jan-20 Paid in Capital in excess of par $58,000 Common Stock $58,000 (116000/2 = $58000) 1-Nov-20 Retained Earnings $130,500 Cash Dividend Payable $130,500 (174 million x 0.75 = $130.5 million) 1-Dec-20 Cash Dividend Payable $130,500 Cash $130,500 2 Statement of Shareholders Equity For the years ended Dec 31, 2018, 2019 and 2020 Common Stock Additional Paid in capital Retained Earnings Total Shareholders' Equity Jan. 1, 2018 $108,000 $648,000 $870,000 $1,626,000 Net Income $370,000 $370,000 Cash Dividend ($97,200) ($97,200) Dec. 31, 2018 $108,000 $648,000 $1,142,800 $1,898,800 Net Income $435,000 $435,000 Property Dividend ($2,300) ($2,300) Stock Dividend $8,000 $112,000 ($129,600) ($9,600) Cash Dividend ($104,400) ($104,400) Dec. 31, 2019 $116,000 $760,000 $1,341,500 $2,217,500 3-for-2 split effected in the form of a stock dividend $58,000 ($58,000) $0 Net Income $495,000 $495,000 Cash Dividend ($130,500) ($130,500) Dec. 31, 2020 $174,000 $702,000 $1,706,000 $2,582,000

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