Please help. I am not sure what I have entered is correct. I need explanations o
ID: 2408249 • Letter: P
Question
Please help. I am not sure what I have entered is correct. I need explanations of how to get the answer so I can understand it.
Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockholders' equity accounts. Common Stock ($26 par value, 58,500 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,521,000 192,000 622,000 During the year, the following transactions occurred. Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1 Mar. 1 Paid the dividend declared in February Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $38. July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31, On July 1, the market price of the stock was $14 per share. 31 Issued the shares for the stock divldend Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2018. Determined that net income for the year was $359,000. Dec. 1 31 Journalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)Explanation / Answer
Geffrey Corporation
Journalize the transactions and the closing entries for net income and dividends:
Date
Account Titles and Explanation
Ref. No
Debit
Credit
1-Feb
Retained Earnings
$58,500
Dividends Payable
$58,500
(To record declaration of cash dividend of $1 per outstanding share; $1 x 58,500 shares = $58,500)
1-Mar
Dividend Payable
$58,500
Cash
$58,500
(To record payment of dividend)
1-Apr
Memo -
Stock split - Two for one
number of shares increase to 117,000 (58,500 x2)
Hence, par value per share = $1,521,000/117,000 = $13
1-Jul
Retained Earnings
$245,700
Common Stock Dividends Distributable
$228,150
(117,000 x 15% x $13)
Paid-in Capital in Excess of par
$17,550
(117,000 x 15% x $1($14 - $13))
(To record 15% stock dividend - 117,000 x 15% = 17,550 shares
par value of stock dividend = $13 x 17,550 = $228,150
Paid-in Capital in Excess of par
17,550 x ($14-$13))
31-Jul
Common Stock Dividends Distributable
$228,150
Common Stock
$228,150
(To record issue of stock dividend of 15%)
1-Dec
Retained Earnings
$53,820
Dividends Payable
$53,820
(To record payment of $0.40 dividend per share on outstanding shares; $0.40 x (117,000 + 17,550) = $53,820)
31-Dec
Income Summary
$359,000
Retained Earnings
$359,000
(To record net income )
Beginning balances and entries to stockholders’ equity accounts:
Common Stock
Date
Explanation
Ref
Debit
Credit
Balance
1-Jan
Balance
$1,521,000
1-Apr
2 for 1 stock split; par value $13
31-Jul
Adjusting
$228,150
$1,749,150
Common Stock Dividends Distributable
Date
Explanation
Ref
Debit
Credit
Balance
1-Jul
$228,150
$228,150
31-Jul
$228,150
0
Paid in capital in Excess of Par
Date
Explanation
Ref
Debit
Credit
Balance
1-Jan
Balance
$192,000
1-Jul
$17,550
$209,550
Retained Earnings
Date
Explanation
Ref
Debit
Credit
Balance
1-Jan
Balance
$622,000
1-Feb
Cash Dividend
$58,500
$563,500
1-Jul
Stock Dividend
$245,700
$317,800
1-Dec
Cash Dividend
$53,820
$263,980
31-Dec
Net Income
$359,000
$622,980
Cash Dividends
Date
Explanation
Ref
Debit
Credit
Balance
1-Feb
retained earnings
$58,500
$58,500
1-Mar
Cash
$58,500
0
1-Dec
retained earnings
$53,820
$53,820
Stock Dividends
Date
Explanation
Ref
Debit
Credit
Balance
1-Jul
Retained Earnings
$228,150
$228,150
31-Jul
Common Stock
$228,150
0
Geffrey Corporation
Balance Sheet (partial)
31-Dec-17
Stockholders' Equity
Paid-in Capital
Common Stock, $13 par value; (117,000 + 17,550)
Shares issued and outstanding
$1,749,150
Additional paid-in capital
in Excess of par
$209,550
Total paid-in capital
$1,958,700
Retained Earnings
$622,980
Total stockholders' equity
$2,581,680
Date
Account Titles and Explanation
Ref. No
Debit
Credit
1-Feb
Retained Earnings
$58,500
Dividends Payable
$58,500
(To record declaration of cash dividend of $1 per outstanding share; $1 x 58,500 shares = $58,500)
1-Mar
Dividend Payable
$58,500
Cash
$58,500
(To record payment of dividend)
1-Apr
Memo -
Stock split - Two for one
number of shares increase to 117,000 (58,500 x2)
Hence, par value per share = $1,521,000/117,000 = $13
1-Jul
Retained Earnings
$245,700
Common Stock Dividends Distributable
$228,150
(117,000 x 15% x $13)
Paid-in Capital in Excess of par
$17,550
(117,000 x 15% x $1($14 - $13))
(To record 15% stock dividend - 117,000 x 15% = 17,550 shares
par value of stock dividend = $13 x 17,550 = $228,150
Paid-in Capital in Excess of par
17,550 x ($14-$13))
31-Jul
Common Stock Dividends Distributable
$228,150
Common Stock
$228,150
(To record issue of stock dividend of 15%)
1-Dec
Retained Earnings
$53,820
Dividends Payable
$53,820
(To record payment of $0.40 dividend per share on outstanding shares; $0.40 x (117,000 + 17,550) = $53,820)
31-Dec
Income Summary
$359,000
Retained Earnings
$359,000
(To record net income )