On January 1, 2014, Prasad Corporation had the following stockholders equity accounts. Common Stock ($25 par value,

Question:

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

Common Stock ($25 par value, 48,000 shares issued

and outstanding) ..................$1,200,000

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

Retained Earnings .................... . 600,000

During the year, the following transactions occurred.

Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.

Mar. 1 Paid the dividend declared in February.

Apr. 1 Announced a 5-for-1 stock split. Prior to the split, the market price per share was $36.

July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable

July 31. On July 1, the market price of the stock was $7 per share.

31 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2015.

31 Determined that net income for the year was $350,000.


Instructions

(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.


Corporation
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...
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...
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Related Book For  book-img-for-question

Financial and managerial accounting

ISBN: 978-1118016114

1st edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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