On January 1, 2014, Chen Corporation had the following stockholders’

On January 1, 2014, Chen Corporation had the following stockholders’ equity accounts.

Common Stock ($5 par value, 200,000 shares issued and

outstanding) ....................$1,000,000

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

Retained Earnings ................. 840,000

During the year, the following transactions occurred.

Jan. 15 Declared a $1 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 $15 per share.

May 15 Issued the shares for the stock dividend.

July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17. (The new par value is $2.50.)

Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2015.

31 Determined that net income for the year was $250,000.


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

(b) Enter the beginning balances, and post the entries to the stockholders’ equity accounts.

(c) Prepare a stockholders’ equity section at December 31.

A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...


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