On January 1, 2017, Geffrey Corporation had the following stockholders’ equity a
ID: 2478233 • Letter: O
Question
On January 1, 2017, Geffrey Corporation had the following stockholders’ equity accounts.
Common Stock ($26 par value, 58,500 shares issued and outstanding) $1,521,000
Paid-in Capital in Excess of Par—Common Stock 192,000
Retained Earnings 622,000
During the year, the following transactions occurred.
Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable
March 1. Mar. 1 Paid the dividend declared in February.
Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $38.
July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $14 per share.
31 Issued the shares for the stock dividend.
Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2018.
31 Determined that net income for the year was $359,000.
Journalize the transactions and the closing entries for net income and dividends. (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. Record journal entries in the order presented in the problem.)
Explanation / Answer
Journal Entries
Date
Accounts titles
Debit
Credit
Feb 1
Retained earnings
$58,500
To Dividend payable
(58,500*1)
$58,500
March 1
Dividend payable
$58,500
To Cash
$58,500
April 1
58,500*2 = 117,000
117,000 shares @13
No journal entry
July 1
Retained earnings
$245,700
To Stock dividend distributable
(17,550*13)
228,150
To paid in capital in excess of par
(117,000@15%*1)
17,550
July 31
Stock dividend distributable
$228,150
To Common stock
$228,150
Dec 1
Retained earnings
$53,820
To Dividend payable
$53,820
Dec 31
Net income
$359,000
To Retained earnings
$359,000
Date
Accounts titles
Debit
Credit
Feb 1
Retained earnings
$58,500
To Dividend payable
(58,500*1)
$58,500
March 1
Dividend payable
$58,500
To Cash
$58,500
April 1
58,500*2 = 117,000
117,000 shares @13
No journal entry
July 1
Retained earnings
$245,700
To Stock dividend distributable
(17,550*13)
228,150
To paid in capital in excess of par
(117,000@15%*1)
17,550
July 31
Stock dividend distributable
$228,150
To Common stock
$228,150
Dec 1
Retained earnings
$53,820
To Dividend payable
$53,820
Dec 31
Net income
$359,000
To Retained earnings
$359,000
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