Problem 11-4A On January i, 2017. Geffrey Corporation had the following stockhol
ID: 2436682 • Letter: P
Question
Problem 11-4A On January i, 2017. Geffrey Corporation had the following stockholders eauity accounts. Common Stock ($26 par value, 50,000 shares issued and outstanding)1,300.000 Paid-in Capital in Excess of ParCommon Stock Retained Earnings 194,000 619,000 During the year, the following transactions occurred. Feb. 1 Mar. 1 Declared a $2 cash dividend per share to stockholders of record on February 15, payable March 1 Paid the dividend declared in February. Apr. Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36. July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31, On July 1, the market price of the stock was $15 per share. Issued the shares for the stock dividend. Declared a so.40 per share dividend to stockholders of record on December 15, payable January 5, 2018. 31 Dec. 31 Determined that net income for the year was $393,500.Explanation / Answer
Date Account Debit $ Credit $ Feb. 1 Cash Dividends 100,000 (50000 x $2) Dividends Payable 100,000 Mar. 1 Dividends Payable 100,000 Cash 100,000 Apr. 1 No Entry (two -for-one split increase number of shares to (50,000 x 2=100,000) No Entry July 1 Stock Dividends 150,000 (100000 x 10% x 15) Common Stock Dividends Distributable 130,000 (100000 x 10% x 13) Paid-on Capital in excess of par value 20,000 Difference July 31 Common Stock Dividends Distributable 130,000 Common Stock 130,000 Dec. 1 Cash Dividends 44,000 (100000+10000) x 0.40 Dividends payable 44,000 Dec. 31 Income Summary- 393,500 Retained Earnings 393,500 (To close net income) Dec. 31 Retained Earnings 150,000 Stock Dividends 150,000 (To close stock dividends) Dec. 31 Retained Earnings 144,000 (100000+44000) Cash Dividends 144,000 (To close cash dividends) (b) Common Stock Date Explanation Ref. Debit Credit Balance Jan. ?1 Balance 1,300,000 Apr. ?1 2 for 1 split—new par $13 Jul. 31 130,000 1,430,000 Common Stock Dividends Distributable Date Explanation Ref. Debit Credit Balance July ?1 130,000 130,000 31 130,000 0 Paid-in Capital in Excess of Par Value Date Explanation Ref. Debit Credit Balance Jan. ?1 Balance 194,000 July ?1 20,000 214,000 Retained Earnings Date Explanation Ref. Debit Credit Balance Jan. ?1 Balance 619,000 Dec. ?31 Net Income 393500 1,012,500 Dec. ?31 Stock dividend 150,000 862,500 Dec. ?31 Cash dividend 144,000 718,500 Cash Dividends Date Explanation Ref. Debit Credit Balance Feb. ?1 100,000 100,000 Dec. ?1 44,000 144000 Dec. 31 144,000 0 Stock Dividends Date Explanation Ref. Debit Credit Balance July ?1 150,000 150,000 31 150,000 0 GEFFREY CORPORATION (c ) Balance Sheet (Partial) December 31, 2017 Stockholders’ equity Paid-in capital Capital stock Common stock, $13 par value, 110,000 ??shares issued and outstanding $1,430,000 Additional paid-in capital In excess of par value 214,000 Total paid-in capital 1,644,000 Retained earnings 718,500 Total stockholders’ equity 2,362,500