Problems: accoA On January 1, 2017, Primo Corporation had the following stockhol

Question

Problems: accoA On January 1, 2017, Primo Corporation had the following stockholders' equity Prepare stockh (LO 4, accounts. Common Stock ($10 par value, 75,000 shares issued $750,000 200,000 540,000 and outstanding) Paid-in Capital in Excess of Par Common Stock Retained Earnings During the year, the following transactions occurred. Jan. 15 Declared a $1 cash dividend per share to stockholders of record on January 31, Feb. 15 Paid the dividend declared in January Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15 Issued the shares for the stock dividend. July 1 Announced a 2-for-1 stock split. The market price per share prior to the Dec. payable February 15. May 15. On April 15, the market price of the stock was $14 per share. announcement was $15. (The new par value is $5.)Vo en Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2018. Determined that net income for the year was $250,000. 1 31 Instructions (a) Journalize the transactions and the closing entries for net income and dividends. (b) Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a stockholders' equity section at December 31

Explanation / Answer

a. Journal

b.

Common stock

Common stock dividend distributable

Paid in capital in excess of par-common stock

Retained earnings

Cash dividends

Stock dividends

c.

Date Account Name Debit Credit Jan 1 Cash dividends ($1 x 75000) $75000 Dividends payable $75000 Feb 15 Dividends payable 75000 Cash 75000 Apr 15 Stock dividend ($14 x 75000 x 10%) 105000 Common stock dividend distributable ($10 x 75000 x 10%) 75000 Paid in capital in excess of par-common stock 30000 May 15 Common stock dividend distributable 75000 Common stock 75000 July 1 No entry. No. of shares = 2 x (75000 x 1.1) = 165000 Dec 1 Cash dividends (165000 x $0.60) 99000 Dividends payable 99000 Dec 31 Income summary 250000 Retained earnings 250000 (To close net income) Dec 31 Retained earnings 105000 Stock dividends 105000 (To close stock dividends) Dec 31 Retained earnings 174000 Cash dividends 174000 (To close cash dividends)

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