Problem 11-7A (Part Level Submission) (a) Journalize the transactions and the cl
ID: 2429574 • Letter: P
Question
Problem 11-7A (Part Level Submission)
(a)
Journalize the transactions and the closing entries for net income and dividends. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
A total of 9 ENTRIES INCLUDING THE NO ENTRY ONES
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.
Explanation / Answer
Note: No entry is recorded for stock split but only a memo entry reducing the par value of the common stock and increasing the number of common shares outstanding.
No entry is required for closing stock dividend as the same is directly debited to retained earnings at the time of declaration itself.
Date General Journal Debit Credit Jan. 15 Dividend (78300 x $1.10) 86130 Dividends payable 86130 (To record declaration of dividends) Feb. 15 Dividends payable 86130 Cash 86130 (To record payment of dividends) Apr. 15 Retained earnings (5% x 78300 x $16) 62640 Common stock dividend distributable (5% x 78300 x $10) 39150 Paid-in capital in excess of par value-common stock 23490 (To record declaration of stock dividends) May. 15 Common stock dividend distributable 39150 Common stock 39150 (To record distribution of stock dividend) Jul. 1 No Entry 0 No Entry 0 Dec. 1 Dividend [(78300 + 3915) x $0.50) 41107.50 Dividends payable 41107.50 (To record declaration of dividends) Dec. 31 Income summary 225000 Retained earnings 225000 (To close net income to retained earnings) Dec. 31 Retained earnings 127237.50 Dividend ($86130 + $41107.50) 127237.50 (To close cash dividends to retained earnings) Dec. 31 No Entry 0 No Entry 0