Healthy Living Co. is an HMO for businesses in the Seattle area. The following account balances appear on the balance sheet of Healthy Living Co.: Common stock (400,000 shares authorized; 300,000 shares issued), $18 par, $5,400,000; Paid-in capital in excess of par-common stock, $1,500,000; and Retained earnings, $78,000,000. The board of directors declared a 5% stock dividend when the market

Chapter 11, Exercises #10

Healthy Living Co. is an HMO for businesses in the Seattle area. The following account balances appear on the balance sheet of Healthy Living Co.: Common stock (400,000 shares authorized; 300,000 shares issued), $18 par, $5,400,000; Paid-in capital in excess of par-common stock, $1,500,000; and Retained earnings, $78,000,000. The board of directors declared a 5% stock dividend when the market price of the stock was $40 a share. Healthy Living Co. reported no income or loss for the current year.

a. Journalize the entries to record

(1) The declaration of the dividend, capitalizing an amount equal to market value,

(2) The issuance of the stock certificates.

b. Determine the following amounts before the stock dividend was declared:

(1) Total paid-in capital,

(2) Total retained earnings,

(3) Total stockholders' equity.

c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year:

(1) Total paid-in capital,

(2) Total retained earnings,

(3) Total stockholders' equity.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...