At December 31, 2013, Eaton Corp. reported the following shareholders equity: Shareholders Equity Share Capital: Common Shares,

Question:

At December 31, 2013, Eaton Corp. reported the following shareholders’ equity:

Shareholders’ Equity

Share Capital:

Common Shares, 240,000 shares authorized,

120,000 shares issued and 100,000 outstanding.....$1,440,000

Contributed Surplus (purchase of treasury shares)...... 20,000

Retained Earnings.................. 730,000

Less: 20,000 Treasury Shares............... (240,000)

Total Shareholders’ Equity.............. $1,950,000

During 2014, Eaton Corp. completed these transactions and events:

Jan 15 Paid cash dividends of $0.50 per share, which were declared on December 15, 2013.

Apr 1 Issued 50,000 common shares at $15 per share.

Jun 30 Declared a 10% stock dividend to be distributed on July 31. The market price was $16.

July 31 Distributed stock dividend.
Dec 20 Declared a 2-for-1 stock split.

Dec 31 Net income for the year was $200,000.

Requirements

1. Prepare journal entries to record the above transactions.

2. Prepare Eaton’s shareholders’ equity section of the balance sheet at December 31, 2014.

3. Prepare Eaton’s statement of changes in equity for 2014.

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