Problem 11-7A On January 1, 2017, Primo Corporation had the following stockholde
ID: 2436424 • Letter: P
Question
Problem 11-7A On January 1, 2017, Primo Corporation had the following stockholders' equity accounts. Common Stock (10par vr so sares issued and outstanding) $803,000 Paid-in Capital in Excess of Par Value-Common Stock Retained Earnings 533,000 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, 2018. Dec. 31 Determined that net income for the year was $210,000.Explanation / Answer
a.
c. Stockholders' equity
paid in capital :
Capital stock
Common stock , $5 par value,168630 shares outstanding = 843150
Additional paid- in capital in excess of par value [203000+24090] = 227090
paid in capital = 1070240
Retained earnings [533000+ 210000- 172645 -64240] = 506115
Total Stockholders' equity = 1576355
Date Accounts title Dr Cr jan 15 Cash dividend [$1.10 * 80300] 88330 To Dividend payable 88330 feb 15 Dividend payable 88330 To cash 88330 April 15 Stock dividend [5% * 80300 * $16] 64240 To common stock dividend distributable [5%*80300 * $10] 40150 To paid- in capital in excess of par value 24090 may 15 common stock dividend distributable [5%*80300 * $10] 40150 To common stock 40150 july 1 no entry needed for spitting up of shares (now. total shares outstanding = [4015+80300] * 2 = 168630 shares at $5 par value Dec 1 Cash Dividend[168630 * $0.5] 84315 To Dividend payable 84315 Dec31 Income summary 210000 To retained earnings 210000 [To close net income from income summary ] Dec 31 Retained earnings [88330 + 84315] 172645 To cash dividend 172645 [To close cash dividend Account ] Dec 31 Retained earnings 64240 To Stock dividend 64240 [To close stock dividend Account ]