On January 1, 2017, Geffrey Corporation had the following stockholders’ equity a
ID: 2421815 • Letter: O
Question
On January 1, 2017, Geffrey Corporation had the following stockholders’ equity accounts.
During the year, the following transactions occurred.
31 Determined that net income for the year was $350,000.
A) Journalize the transactions and the closing entries for net income and dividends.
B)Enter the beginning balances, and post the entries to the stockholders’ equity accounts.
C)Prepare a stockholders’ equity section at December 31.
Common Stock ($20 par value, 60,000 shares issued and outstanding) $1,200,000 Paid-in Capital in Excess of Par—Common Stock 200,000 Retained Earnings 600,000Explanation / Answer
FEB 1 RETAINED EARNNING A/C..............................DR $60000 (60000 SHARE *$1)
TO CASH DIVIDEND PAYBLE A/C $60000
MARCH 1 CASH DIVIDEND PAYBLE A/C...................DR $60000
TO CASH A/C $60000
APRIL 1 , NO TYPICAL JOURNAL ENTRY NECESSARY, ONLY A MEMEO JOURNAL ENTRY IS ENOUGH TO INCEREASE THE NUMBER OF COMMON STOCK AND DECEREASE THE PAR VALUE OF COMMON STOCK.
NUMBER OF COMMON STOCK WILL BW (60000 * 2) = 120000
PAR VALUE WILL BE ($20 / 2) = $10
JULY 1 RETAINED EARNNINGS A/C............................DR $156000 [(120000 * 10%) * $13]
TO STOCK DIVIDEND PAYBLE $156000
JULY 31 STOCK DIVIDEND PAYBLE A/C.....................DR $156000
TO COMMON STOCK A/C $120000
TO ADDITIONAL PAID IN CAPITAL $36000
DEC 1 RERTAINED EARNNINGS A/C...............................DR $60000 (120000 * $0.50)
TO CASH DIVIDEND PAYBLE $60000
DEC 31 NET INCOME A/C..................................DR $350000
TO RETAINED EARNNINGS A/C $350000
B./
COMMON STOCK A/C
EXCESS PAID IN CAPITAL A/C
RETAINED EARNNINGS A/C
C./
STOCK HOLDERS EQUITY SECTION
COMMON STOCK ($ 10 PAR VALUE, 132000 SHARES ISSUED AND OUTSTANDING) = $1320000
PAID IN CAPITAL IN EXCESS OF PAR = $236000
RETAINED EARNNINGS = $674000
TOTAL = $2230000
PARTICULLAR AMOUNT (DR) $ PARTICULLAR AMOUNT (CR) $ BY BALANCE B/D 1200000 BY STOCK DIVIDEND A/C 120000 TO BALANCE C/D 1320000 TOTAL 1320000 TOTAL 1320000