On January 1, 2012, Cornell Corporation had these stockholders equity accounts. Common Stock ($10 par value, 70,000
Question:
On January 1, 2012, Cornell Corporation had these stockholders’ equity accounts.
Common Stock ($10 par value, 70,000 shares issued and outstanding) ...$700,000
Paid-in Capital in Excess of Par Value .................500,000
Retained Earnings .........................620,000
During the year, the following transactions occurred.
Jan. 15 Declared a $0.50 cash dividend per share to stockholders of record on January 31, payable February 15.
Feb. 15 Paid the dividend declared in January.
Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $14 per share.
May 15 Issued the shares for the stock dividend.
Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2013.
31 Determined that net income for the year was $400,000.
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 ratio.
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Step by Step Answer:
a Jan 15 Cash Dividends 70000 X 050 35000 Dividends Payable 35000 Feb 15 Dividends Payable 35000 Cas...View the full answer
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
