On January 1, 2017, Prasad SpA had the following equity accounts.
Share Capital-Ordinary (€25 par value, 48,000 shares issued and outstanding)....€1,200,000
Share Premium-Ordinary.......................................................................200,000
Retained Earnings.................................................................................600,000
During the year, the following transactions occurred.
Feb. 1 Declared a €1 cash dividend per share to shareholders of record on February 15, payable March 1.
Mar. 1 Paid the dividend declared in February.
Apr. 1 Announced a 5-for-1 share split. Prior to the split, the market price per share was €36.
July 1 Declared a 10% share dividend to shareholders of record on July 15, distributable July 31. On July 1, the market price was €7 per share.
July 31 Issued the shares for the share dividend.
Dec. 1 Declared a €0.40 per share dividend to shareholders of record on December 15, payable January 5, 2018.
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 equity accounts.
(c) Prepare an equity section at December 31.