On January 1, 2014, Everett Corporation had these stockholders’ equity accounts.

Common Stock ($10 par value, 70,000 shares issued and outstanding).... $700,000

Paid-in Capital in Excess of Par Value..................500,000

Retained Earnings..........................620,000

During the year, the following transactions occurred.

Jan. 15 Declared a $0.50 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.

May 15 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2015.

31 Determined that net income for the year was $400,000.

Instructions

(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

(b) Enter the beginning balances and post the entries to the stockholders’ equity T-accounts.

(c) Prepare the stockholders’ equity section of the balance sheet at December 31.

(d) Calculate the payout ratio and return on common stockholders’ equity.