The stockholders equity accounts of Holt Inc., at January 1, 2014, are as follows. Preferred Stock, $100
Question:
The stockholders’ equity accounts of Holt Inc., at January 1, 2014, are as follows.
Preferred Stock, $100 par, 7% .............. $600,000
Common Stock, $10 par ...............900,000
Paid-in Capital in Excess of Par—Preferred Stock ....100,000
Paid-in Capital in Excess of Par—Common Stock .....200,000
Retained Earnings .................500,000
There were no dividends in arrears on preferred stock. During 2014, the company had the following transactions and events.
July 1 Declared a $0.50 cash dividend per share on common stock.
Aug. 1 Discovered a $72,000 overstatement of 2013 depreciation on equipment. (Ignore income taxes.)
Sept. 1 Paid the cash dividend declared on July 1.
Dec. 1 Declared a 10% stock dividend on common stock when the market price of the stock was $16 per share.
15 Declared a 7% cash dividend on preferred stock payable January 31, 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 in the accounts and post to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed.)
(c) Prepare a retained earnings statement for the year.
(d) Prepare a stockholders’ equity section at December 31, 2014.
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Step by Step Answer:
Accounting Principles
ISBN: 9781118566671
11th Edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso