Required (a) Journalize the transactions and the closing entries for net income

Question

Required (a) Journalize the transactions and the closing entries for net income and dividends. (b) Using T-Accounts; Enter the beginning balances, and post the entries, from (a) above, to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) (c) Prepare a partial Balance Sheet of just the Stockholders'Equity section at December 31,2017. On January 1, 2017, Matthew Corporation had tne tolowing stockholders' equity accounts. Common Stock ($10 par value, 75,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $750,000 150,000 300,000 Jan. 15 Declared a SI cash dividend per share to stockholders of record on January 31, payable February 15 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. On April 15, the market price of the stock was $14 per share. Issued the shares for the stock dividend. Announced a 2-for-i stock spiit. The market price per share prior to the announcement was $15. (The new par value is S5.) Declared a S0.60 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 May July 15 1 1 31 Dec.

Explanation / Answer

journal:

Ledger:

Date Account Debit Credit Jan.15 Retained earnings 75000 To Dividend payable 75000 [Dividend delcared] Feb.15 Dividend payable 75000 To Bank 75000 [Dividend paid] Apr.15 Retained earnigs 105000 To Stock dividend payable 105000 [stock dividend declared= 75000*10%*14] May.15 Stock dividend payable 105000 To common stock 75000 To additional paid in capital 30000 [ Stock dividend distributed] Jul.1 Common stock 825000 To common stock 825000 [Stock split] Dec.1 Retained earnings 49500 To Dividend payable 49500 [Dividend delcared =82500*0.6] Dec.31 Profit and loss A/c 250000 To retained earnings 250000 [net income transferred to retained earnings]

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