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On January 1, 2014, Primo Corporation had the following stockholders' equity accounts.Common Stock ($12 par value, 77,300 shares issued and outstanding) $927,600 Paid-in Capital in Excess of Par Value-Common Stock 197,100 Retained Earnings 580,000
During the year, the following transactions occurred.
Jan. 15 Declared a $1.00 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 5% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $16 per share. 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 announcement was $13. (The new par value is $6.) Dec. 1 Declared a $0.90 per share cash dividend to stockholders of record on December 15, payable January 10, 2015. Dec. 31 Determined that net income for the year was $273,100.
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Explanation / Answer
Date Debit Credit Jan. 15 Cash Dividends 77300 Divdend Payable 77300 (Being cash divdend declared on 77300 common shares $$1 per share) Feb. 15 Divdend Payable 77300 Cash 77300 (Being cash divdend $77300 Paid ) Apr. 15 Stock Dividend 61840 Stock Dividend Payable 61840 (Beinf Stock Dividend of 5% declared on shares outstanding as on April 30) Stockholders of record on April 30 = 77300 Shares , hence Stock Dividend = 77300*5% =3865 Shares *market value $16 = 61840 May.15 Stock Dividend Payable 61840 Common Stock (3865 Shares * par value $12) 46380 Paid-in Capital in Excess of Par Value-Common Stock (61840 - 46380) 15460 (Being Shares issued for Stock Dividend of 5% declared) July. 1 No journal required Dec.1 Cash Dividend 73048.5 Divdend Payable 73048.5 Declared a $0.90 per share cash dividend to stockholders of record on December 15, payable January 10, 2015. Numer of shares outstanding as on Dec. 15 = 77300 + 3865 = 81165 ,Dividend = 81165 * $0.90 = $73048.50 Dec. 31 Income Summary 273100 Retained Earnigns 273100 (To close net income.) Dec.31 Retained Earnigns 150348.5 Cash Dividend (77300+73048.50) 150348.5 (To close Cash dividends.) Dec. 31 Retained Earnigns 61840 Stock Dividend 61840 (To close stock dividends.)
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