Lemke Corporation produces and sells plano. The Stockholders\' Equity accounts o

Question

Lemke Corporation produces and sells plano. The Stockholders' Equity accounts on January 1, 2017 are as follows: Common Stock, $10 par (100,000 shares authorized, 40,000 shares issued) PIC in Excess par-Common Stock Retained Earnings Treasury Stock (10,000 shares at cost) $400,000 200,000 900,000 The following transactions occurred during the year Declared a Cash Dividend of $0.80 per share on the Common Stock outstanding. Dividend will be paid on 2/16 1/16 2/16 Paid the Cash Dividend that was previously declared on 1716 3/19 Reissued 5,000 shares of the Treasury Stock at $25 per share. 4/13 Issued 15,000 shares of Common Stock for $30 per share 803 The directors declare a 2% stock dividend distributable on 9/13. The market value is $40 per share on this date 9/13 Distributed the Stock Dividend declared on 8/03 11/17 Reissued the remaining 5,000 shares of Treasury Stock for $18 per share. 12/30 Declared a Cash Dividend of $0.90 per share on the Common Stock outstanding. The dividend will be paid on 1/30. 12/31 Closed the $80,000 credit balance of the Income Summary account 12/31 Closed the dividends accounts.

Explanation / Answer

*Number of shares of stock dividend = 2% x (30000 + 5000 + 15000) = 2% x 50000 = 1000 shares

2.

Date Account Titles and Explanation Debit Credit 1/16 Dividends ($0.80 x 30000) 24000 Dividends payable 24000 (To record cash dividend declared) 2/16 Dividends payable 24000 Cash 24000 (To record payment of cash dividend) 3/19 Cash (5000 x $25) 125000 Treasury stock (5000 x $20) 100000 PIC from treasury stock 25000 (To record sale of treasury stock) 4/13 Cash (15000 x $30) 450000 Common stock 150000 PIC in excess par-Common stock 300000 (To record issue of common stock) 8/03 Retained Earnings (1000 x $40) * 40000 Common Stock Dividend Distributable (1000 x $10) 10000 PIC in excess par-Common stock 30000 (To record declaration of stock dividend) 9/13 Common Stock Dividend Distributable 10000 Common Stock 10000 (To record distribution of stock dividend) 11/17 Cash (5000 x $18) 90000 PIC from treasury stock 10000 Treasury stock (5000 x $20) 100000 (To record sale of treasury stock) 12/30 Dividends [$0.90 x (50000 + 1000 + 5000)] 50400 Dividends payable 50400 (To record cash dividend declared) 12/31 Income summary 80000 Retained Earnings 80000 (To close income summary to retained earnings) 12/31 Retained earnings 74400 Dividends (24000 + 50400) 74400 (To close dividends to retained earnings)

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