On January 1, 2019, Larkspur, Inc. had the following stockholders\' equity accou

Question

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.

Explanation / Answer

Date General Journal Debit Credit Jna 15 Cash Dividend 86130 Dividend Payable 86130 78,300*1.1 15-Feb Dividend Payable 86130 Cash 86130 15-Apr Stock dividend 78300*5%*16 62640 Common Stock Dividend Distributable 78300*5%*10 39150 Additional Paid-in-Capital (Diff) 23490 15-May Common Stock Dividend Distributable 78300*5%*10 39150 Common Stock 39150 Shares Outstanding - 78300+3915 = 82215 01-Jul No Entry Shares Outstanding - 78300+3915 = 82215 *2 = 164430 01-Dec Cash Dividend 82215 Dividend Payable 82215 164430*0.5 31-Dec Income summary 225000 Retained Earnings 225000

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