The stockholders equity accounts of Holt Inc., at January 1, 2014, are as follows. Preferred Stock, $100

Question:

The stockholders’ equity accounts of Holt Inc., at January 1, 2014, are as follows.

Preferred Stock, $100 par, 7% .............. $600,000

Common Stock, $10 par ...............900,000

Paid-in Capital in Excess of Par—Preferred Stock ....100,000

Paid-in Capital in Excess of Par—Common Stock .....200,000

Retained Earnings .................500,000

There were no dividends in arrears on preferred stock. During 2014, the company had the following transactions and events.

July 1 Declared a $0.50 cash dividend per share on common stock.

Aug. 1 Discovered a $72,000 overstatement of 2013 depreciation on equipment. (Ignore income taxes.)

Sept. 1 Paid the cash dividend declared on July 1.

Dec. 1 Declared a 10% stock dividend on common stock when the market price of the stock was $16 per share.

15 Declared a 7% cash dividend on preferred stock payable January 31, 2015.

31 Determined that net income for the year was $350,000.

Instructions

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

(b) Enter the beginning balances in the accounts and post to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed.)

(d) Prepare a stockholders’ equity section at December 31, 2014.

Common Stock
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