November 1, 2016, the board of directors declared a cash dividend of $0.60 per s
ID: 2562957 • Letter: N
Question
November 1, 2016, the board of directors declared a cash dividend of $0.60 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
On March 1, 2017, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $1.9 million, but were purchased two years previously for $1.7 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
On July 12, 2017, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $23 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares.
On November 1, 2017, the board of directors declared a cash dividend of $0.60 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
On January 15, 2018, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $24 per share.
On November 1, 2018, the board of directors declared a cash dividend of $0.45 per share on its common shares, payable to shareholders of record November 15, to be paid December 1
Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2016–2018. At December 31, 2015, the corporation’s accounts included:
Journal Entries
a.November 1, 2016, the board of directors declared a cash dividend of $0.60 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
b.On March 1, 2017, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickie was holding as an investment. The bonds had a fair value of $1.9 million, but were purchased two years previously for $1.7 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
c.On July 12, 2017, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $23 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares.
d.On November 1, 2017, the board of directors declared a cash dividend of $0.60 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
e.On January 15, 2018, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $24 per share.
f.On November 1, 2018, the board of directors declared a cash dividend of $0.45 per share on its common shares, payable to shareholders of record November 15, to be paid December 1
Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2016–2018. At December 31, 2015, the corporation’s accounts included:
($ in 000s) Common stock, 105 million shares at $1 par $ 105,000 Paid-in capital—excess of par 624,000 Retained earnings 840,000Explanation / Answer
Solution:
Journal Entries
Transaction
Date
General Journal
Debit
Credit
(a)
Nov.1, 2016
Retained Earnings
$63.00
Dividend Payable (105 million shares*$0.60)
$63.00
(Cadh dividend declared)
Nov.15, 2016
No Entry on record date
Dec.1, 2016
Dividend Payable
$63.00
Cash
$63.00
(Dividend paid recorded)
(b)
March.1, 2017
Investment Account (1.9 - 1.7)
$0.20
Gain on Appreciation of Investment
$0.20
Retained Earnings
1.9
Property Dividend Payable
1.9
March.13, 2017
No entry on record date
April.5, 2017
Property Dividend Payable
1.9
Investment Account
1.9
(c )
July.12, 2017
Retained Earnings
120.75
Common Stock (5 million x $1 par)
5
Additional Paid in Capital
113.25
Cash
2.5
(No of share of stock dividend = 105 million x 5% = 5.25 million i.e 5 million shares, fraction are paid cash $250,000)
(d)
Nov.1, 2017
Retained Earnings
$66.00
Dividend Payable (105+5 New) million shares*$0.60)
$66.00
(Cash dividend declared)
Nov.15, 2017
No Entry on record date
Dec.1, 2017
Dividend Payable
$66.00
Cash
$66.00
(Dividend paid recorded)
(e)
Jan.15, 2018
Retained Earnings (55 million x $24)
$1,320.00
Common Stock (55 million x $1 par)
$55.00
Additional Paid in Capital
$1,265.00
(Stock Split Ratio = 3 - for 2 stock split. It means after stock split the shareholder have 3 shares previously holding 2shares)
(Total Number of Shares after stock split = 110 Million / 2 * 3 = 165 million share
(Number of Shares issued in stock split = 165 - 110 = 55 Million Share
(f)
Nov.1, 2018
Retained Earnings
$74.25
Dividend Payable (165 million shares*$0.45)
$74.25
(Cash dividend declared)
Nov.15, 2018
No Entry on record date
Dec.1, 2018
Dividend Payable
$74.25
Cash
$74.25
(Dividend paid recorded)
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Transaction
Date
General Journal
Debit
Credit
(a)
Nov.1, 2016
Retained Earnings
$63.00
Dividend Payable (105 million shares*$0.60)
$63.00
(Cadh dividend declared)
Nov.15, 2016
No Entry on record date
Dec.1, 2016
Dividend Payable
$63.00
Cash
$63.00
(Dividend paid recorded)
(b)
March.1, 2017
Investment Account (1.9 - 1.7)
$0.20
Gain on Appreciation of Investment
$0.20
Retained Earnings
1.9
Property Dividend Payable
1.9
March.13, 2017
No entry on record date
April.5, 2017
Property Dividend Payable
1.9
Investment Account
1.9
(c )
July.12, 2017
Retained Earnings
120.75
Common Stock (5 million x $1 par)
5
Additional Paid in Capital
113.25
Cash
2.5
(No of share of stock dividend = 105 million x 5% = 5.25 million i.e 5 million shares, fraction are paid cash $250,000)
(d)
Nov.1, 2017
Retained Earnings
$66.00
Dividend Payable (105+5 New) million shares*$0.60)
$66.00
(Cash dividend declared)
Nov.15, 2017
No Entry on record date
Dec.1, 2017
Dividend Payable
$66.00
Cash
$66.00
(Dividend paid recorded)
(e)
Jan.15, 2018
Retained Earnings (55 million x $24)
$1,320.00
Common Stock (55 million x $1 par)
$55.00
Additional Paid in Capital
$1,265.00
(Stock Split Ratio = 3 - for 2 stock split. It means after stock split the shareholder have 3 shares previously holding 2shares)
(Total Number of Shares after stock split = 110 Million / 2 * 3 = 165 million share
(Number of Shares issued in stock split = 165 - 110 = 55 Million Share
(f)
Nov.1, 2018
Retained Earnings
$74.25
Dividend Payable (165 million shares*$0.45)
$74.25
(Cash dividend declared)
Nov.15, 2018
No Entry on record date
Dec.1, 2018
Dividend Payable
$74.25
Cash
$74.25
(Dividend paid recorded)
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