Question: The stockholders equity accounts of Holt Inc at January 1

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.

(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.)
(c) Prepare a retained earnings statement for the year.
(d) Prepare a stockholders’ equity section at December 31, 2014.

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  • CreatedJanuary 30, 2014
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