Question

On January 1, 2014, Lamar Corporation had these stockholders’ equity accounts.
Common Stock ($20 par value, 80,000 shares issued and outstanding) $1,600,000
Paid-in Capital in Excess of Par Value 240,000
Retained Earnings 750,000
During the year, the following transactions occurred.
Feb. 1 Declared a $1.00 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 Paid the dividend declared in February.
July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $25 per share.
31 Issued the shares for the stock dividend.
Dec. 1 Declared a $1 per share dividend to stockholders of record on December 15, payable January 5, 2015.
31 Determined that net income for the year was $500,000. The market price of the common stock on this date was $32.

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.



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  • CreatedApril 07, 2014
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