Problem 11-8A Warning Don\'t show me this message again for the assignment Ok Ca
ID: 2444957 • Letter: P
Question
Problem 11-8A
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Date
Account Titles and Explanation
Debit
Credit
(To close net income)
(To close stock dividends)
(To close cash dividends)
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Common Stock
Retained Earnings
Paid-in Capital in Excess of Par Value
Cash Dividends
Common Stock Dividends Distributable
Stock Dividends
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EVERETT CORPORATION
Partial Balance Sheet
December 31, 2014
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Problem 11-8A
On January 1, 2014, Everett Corporation had these stockholders’ equity accounts.Common Stock ($10 par value, 78,100 shares issued and outstanding) $781,000 Paid-in Capital in Excess of Par Value 491,700 Retained Earnings 649,700
During the year, the following transactions occurred.
Jan. 15 Declared a $0.70 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 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $13 per share. May 15 Issued the shares for the stock dividend. Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2015. Dec. 31 Determined that net income for the year was $438,400.
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Explanation / Answer
Date Account Titles and explanation Debit Credit 31-01-2014 Retained earnings 54670 To dividend payable 54670 (Being dividend declared @ .7 per share) 15-02-2014 Dividend payable 54670 To cash 54670 (Being dividend paid) 30-04-2015 Retained Eranings 101530 To stock dividend distributable 101530 (being 10 % stock dividend declared) 15-05-2015 Stock dividend distributable 101530 To common stock 78100 To paid in capital 23430 (Being 7810 stock dividend issued @ 13 per share) 15-12-2015 Retained earnings 51546 To dividend payable 51546 (Being dividend declared @ .6 per share) Common Stock Date Particulars Amount Date Particulars Amount 31-12-2015 To balance c/d 859100 01-01-2014 By balance 781000 15-05-2015 Stock dividend distributable 78100 859100 859100 Paid in capital Date Particulars Amount Date Particulars Amount 31-12-2015 To balance c/d 515130 01-01-2014 By balance 491700 15-05-2015 Stock dividend distributable 23430 515130 515130 Retained earnings Date Particulars Amount Date Particulars Amount 31-01-2014 To dividend payable 54670 01-01-2014 By balance 649700 30-04-2015 To stock dividend distributable 101530 31-12-2015 By Net Income 438400 15-12-2015 To dividend payable 51546 31-12-2015 To balance c/d 880354 1088100 1088100 Dividend Payable (Cash dividend) Date Particulars Amount Date Particulars Amount 15-02-2014 To cash 54670 31-01-2014 By retained earnings 54670 31-12-2015 To balance c/d 51546 15-12-2015 By retained earnings 51546 106216 106216 Stock dividend distributable Date Particulars Amount Date Particulars Amount 15-05-2015 To common stock 78100 30-04-2015 By retained earnings 101530 To paid in capital 23430 101530 101530 Pay out ratioo Cash dividend 54670 Cash dividend 51546 Stock dividend 101530 Total dividend paid 207746 Net Income 438400 Pay out ratio 47.39% Dividend/ Net income Return on common stock holders equity Net Income 438400 Average Stock holder's Equity (781000+859100)/2 820050 Average paid in capital (491700+515130)/2 503415 ROE 438400/1323195 33.13%