Altuve Co. was incorporated on January 1, 2016, at which time 125,000 shares of $10 par value common stock were authorized, and 50,000 of these shares were issued for $12 per share. Net income for the year ended December 31, 2016, was $571,500. Altuve Co.’s board of directors declared dividends of $2 per share of common stock on December 31, 2016, payable on February 7, 2017.

Required:

a. Use the horizontal model to show the effects of the issuance of common stock on January 1, 2016. (Use amounts with + for increases and amounts with – for decreases.)

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders’ Equity

←

Net Income

=

Revenues

−

Expenses

=

+

←

=

−

=

+

←

=

−

b. Use the horizontal model to show the effects of the declaration of dividends on December 31, 2016. (Use amounts with + for increases and amounts with – for decreases.)

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders’ Equity

←

Net Income

=

Revenues

−

Expenses

=

+

←

=

−

c. Use the horizontal model to show the effects of the payment of dividends on February 7, 2017. (Use amounts with + for increases and amounts with – for decreases.)

Balance Sheet

Income Statement

Assets

=

Liabilities

+

Stockholders’ Equity

←

Net Income

=

Revenues

−

Expenses

=

+

←

=

−

d. Record the journal entry for the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal Entry Worksheet

• The issuance of common stock on January 1, 2016.
• The declaration of dividends on December 31, 2016.
• The payment of dividends on February 7, 2017.

Transaction

General Journal

Debit

Credit

a.

*Enter debits before credits

Answer rating: 100% (QA)

1 Assets liabilities Equity net expense revenue income a 600000 500000 10... View the full answer