Problem 11-7A (Part Level Submission) On January 1, 2019, Larkspur, Inc. had the
ID: 2404863 • Letter: P
Question
Problem 11-7A (Part Level Submission) On January 1, 2019, Larkspur, Inc. had the following stockholders' equity accounts.
Common Stock ($10 par value, 78,300 shares issued and outstanding) $783,000
Paid-in Capital in Excess of Par Value-Common Stock 199,000
Retained Earnings 593,000
During the year, the following transactions occurred.
Jan. 15 Declared a $1.10 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 5% stock dividend to stockholders of record on April 30, distributable
May 15. On April 15, the market price of the stock was $16 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 $14. (The new par value is $5.)
Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2020.
Dec. 31 Determined that net income for the year was $225,000.
a)Journalize the transactions and the closing entries for net income and dividends.
FYI
Jan. 15 Cash Dividends (78,300 × $1.10) $86,130 Apr. 15 Stock Dividends (3,915 × $16) $62,640 Common Stock Dividends Distributable (3,915 × $10) $39,150 Paid-in Capital in Excess of Par-Common Stock (3,915 × $6) $23,490 July 1 Memo - two-for-one stock split increases number of shares to 164,430 = (82,215 × 2) and reduces par value to $5 per share. Dec. 1 Cash Dividends (164,430 × $0.50) $82,215 Dec. 31 Retained Earnings ($39,150 + $82,215) $168,345Explanation / Answer
Answers
Date
Accounts title
Debit
Credit
Jan-15
Dividends
$ 86,130.00
Cash
$ 86,130.00
(cash dividend paid)
Apr-15
Dividends
$ 62,640.00
Dividend distributable
$ 62,640.00
(stock dividend declared)
May-15
Dividend distributable
$ 62,640.00
Common Stock
$ 39,150.00
Paid in Capital in excess of Par - Common Stock
$ 23,490.00
(stock dividend distributed)
Jul-01
NO ENTRY
Dec-01
Dividends
$ 82,215.00
Cash
$ 82,215.00
(cash dividend paid)
Dec-31
Retained Earnings
$ 168,345.00
Dividends
$ 168,345.00
(dividend account closed)
Dec-31
Income Summary
$ 225,000.00
Retained Earnings
$ 225,000.00
(Net Income closed)
Date
Accounts title
Debit
Credit
Jan-15
Dividends
$ 86,130.00
Cash
$ 86,130.00
(cash dividend paid)
Apr-15
Dividends
$ 62,640.00
Dividend distributable
$ 62,640.00
(stock dividend declared)
May-15
Dividend distributable
$ 62,640.00
Common Stock
$ 39,150.00
Paid in Capital in excess of Par - Common Stock
$ 23,490.00
(stock dividend distributed)
Jul-01
NO ENTRY
Dec-01
Dividends
$ 82,215.00
Cash
$ 82,215.00
(cash dividend paid)
Dec-31
Retained Earnings
$ 168,345.00
Dividends
$ 168,345.00
(dividend account closed)
Dec-31
Income Summary
$ 225,000.00
Retained Earnings
$ 225,000.00
(Net Income closed)