Listed below are the transactions that affected the shareholders’ equity of Bran
ID: 2563765 • Letter: L
Question
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:
November 1, 2016, the board of directors declared a cash dividend of $0.90 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 $3.3 million, but were purchased two years previously for $2.9 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 6% common stock dividend (when the market value of the common stock was $16 per share). Cash was paid in lieu of fractional shares representing 20,000 equivalent whole shares.
On November 1, 2017, the board of directors declared a cash dividend of $0.90 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 $17 per share.
On November 1, 2018, the board of directors declared a cash dividend of $0.75 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
1. Record declaration of cash dividend.
2. Record the entry on date of record.
3. Record payment of cash dividend.
4. Record appreciation of investment.
5. Record declaration of property dividends.
6. Record the entry on date of record.
7. Record distribution of property dividends.
8. Record declaration and distribution of stock dividend and settlement of fractional shares.
9. Record declaration of cash dividend.
10.Record the entry on date of record.
11. Record payment of cash dividend.
12. Record declaration and distribution of stock split effected in the form of stock dividend.
13. Record declaration of cash dividend.
14. Record the entry on the date of record.
15. Record payment of cash dividend.
Prepare comparative statements of shareholders’ equity for Branch-Rickie for the three-year period. Net income was $415 million, $480 million, and $540 million for 2016, 2017, and 2018, respectively.
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:
Explanation / Answer
Answer 1. Journal Entry S. No. Date Particulars Dr. Amt. Cr. Amt. a. 1-Nov-16 Retained Earnings Dr. 105,300,000.00 117,000,000 Shares X $0.90 To Dividend Payable 105,300,000.00 (Record the Dividend declared) 15-Nov-16 No Entry 1-Dec-16 Dividend Payable Dr. 105,300,000.00 To Cash 105,300,000.00 (Record the dividend paid to shareholders) b. 1-Mar-17 Investment in Warner Bond Dr. 400,000.00 $3,300,000 - $2,900,000 To Gain on Appreciation of Investment 400,000.00 (Record the appreciation in value of Investment) 1-Mar-17 Retained Earnings Dr. 3,300,000.00 To Property Dividend Payable 3,300,000.00 (Record the property dividend declared) 13-Mar-17 No Entry 5-Apr-17 Property Dividend Payable Dr. 3,300,000.00 To Investment in Warner Bond 3,300,000.00 (Record the propert dividend paid) c. 12-Jul-17 Retained Earnings Dr. 112,320,000.00 To Common Stock 7,000,000.00 (7,020,000 Nos - 20,000 Nos ) X $1 To Paid in Capital in excess of Par 105,000,000.00 (7,020,000 Nos - 20,000 Nos ) X $15 To Cash 320,000.00 20,000 Nos X $16 (Record the stock dividend paid) d. 1-Nov-17 Dividend Payable Dr. 111,600,000.00 124,000,000 Shares X $0.90 To Cash 111,600,000.00 (Record the dividend paid to shareholders) 15-Nov-17 No Entry 1-Dec-17 Dividend Payable Dr. 111,600,000.00 To Cash 111,600,000.00 (Record the dividend paid to shareholders) e. 15-Jan-18 Retained Earnings Dr. 62,000,000.00 124,000,000 Shares X 50% X $1 To Common Stock 62,000,000.00 124,000,000 Shares X 50% X $1 (record the stock dividend issued) In case of Stock Dividend in more than 25%, the stock is recorded at par value f. 1-Nov-18 Dividend Payable Dr. 139,500,000.00 (124,000,000 nos + 62,000,000) X $0.75 To Cash 139,500,000.00 (Record the dividend paid to shareholders) 15-Nov-18 No Entry 1-Dec-18 Dividend Payable Dr. 139,500,000.00 To Cash 139,500,000.00 (Record the dividend paid to shareholders) Answer 2. Branch Rickie Corporation Statement of Stockholders' Equity For the Years Ended Dec 31, 2016, 2017 & 2018 Common Stock Additional Paid in Capital Retained Earnings Total Stockholders' Equity Balance - Jan 1, 2016 117,000,000 702,000,000 960,000,000 1,779,000,000 Net Income - - 415,000,000 415,000,000 Cash Dividends (105,300,000) (105,300,000) Balance - Dec 31, 2016 117,000,000 702,000,000 1,269,700,000 2,088,700,000 Property Dividend (3,300,000) (3,300,000) Common Stock Dividend 7,000,000 105,000,000 (112,320,000) (320,000) Net Income 480,000,000 480,000,000 Cash Dividends (111,600,000) (111,600,000) Balance - Dec 31, 2017 124,000,000 807,000,000 1,522,480,000 2,453,480,000 3 For 2 split effected in form of Stock Dividend 62,000,000 - (62,000,000) - Net Income - - 540,000,000 540,000,000 Cash Dividends - - (139,500,000) (139,500,000) Balance - Dec 31, 2018 186,000,000 807,000,000 1,860,980,000 2,853,980,000
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