Problem 14-4A On January 1, 2014, Ven Corporation had the following stockholders
ID: 2450011 • Letter: P
Question
Problem 14-4A
On January 1, 2014, Ven Corporation had the following stockholders' equity accounts.
Common Stock (no par value, 94,000 shares issued and outstanding) $1,360,800.
Retained Earnings $501,600.
During the year, the following transactions occured.
Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 Paid the dividend declared in February.
Apr. 1 Announced a 3-for-1 stock split. Prior to the split, the amrket price per sahre was $38.
July 1 Declared a 5% stock dividend to stockholders record on July 15, distributable July 31. On July 1, the market price of the stock was $10 per share.
July 31 Issued the shares for the stock dividend.
Dec. 1 Declared a $0.30 per sahre dividend to stockholders of record on December 15, payable January 5, 2015.
Dec. 31 Determined that net income for the year was $302,500.
A. Prepare the stockholders' equity section of the balance sheet at March 31.
B. Prepare the stopckholders' equity section of the balance sheet at June 30.
C. Preapre the stockholders' equity section of the balance sheet at September 30.
D. Prepare the stockholders' equity section of the balance sheet at December 31, 2014.
Explanation / Answer
A. Prepare the stockholders' equity section of the balance sheet at March 31.
Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Retained Earnings would be debited ($1 x 94,000 shares) = $94,000 and DIvidend payable would be Credited.
Mar. 1 Paid the dividend declared in February.
Dividend Payable debited and Cash Credited.
Shareholders' Equity
As on 31st March
Common Stock (no par value, 94,000 shares issued and outstanding) $1,360,800
Retained Earnings ($501,600 - $94,000) $407,600
Total Shareholders' Equity $1,768,400
B. Prepare the stopckholders' equity section of the balance sheet at June 30.
Apr. 1 Announced a 3-for-1 stock split. Prior to the split, the market price per share was $38.
No Journal Entry is required.Only change in Number of Shares (94,000 shares x 3 ) = 282,000 shares
Shareholders' Equity
As on 30th June
Common Stock (no par value, 282,000 shares issued and outstanding) $1,360,800
Retained Earnings $407,600
Total Shareholders' Equity $1,768,400
C. Preapre the stockholders' equity section of the balance sheet at September 30.
July 1 Declared a 5% stock dividend to stockholders record on July 15, distributable July 31. On July 1, the market price of the stock was $10 per share.
Retained earnings $141,000 (282,000 shares x 5% x $10) would be debited and Common Stock Dividend Distributable would be credited. $141,000
July 31 Issued the shares for the stock dividend.
Common stock dividend distributable $141,000 would be debited and Common stock would be credited $141,000
Number of shares = 282,000 + 282,000 x 5% shares = 296,100 shares
Shareholders' Equity
As on 30th Sept
Common Stock (no par value, 296,100 shares issued and outstanding)( $1,360,800 + $141,000)= $1,501,800
Retained Earnings ($407,600 - $141,000) = $266,600
Total Shareholders' Equity $1,768,400
D. Prepare the stockholders' equity section of the balance sheet at December 31, 2014.
Dec. 1 Declared a $0.30 per sahre dividend to stockholders of record on December 15, payable January 5, 2015.
Retained Earnings would be debited ($.30 x 296,100 shares) = $88,830 and DIvidend payable would be Credited.
Shareholders' Equity
As on 31st Dec
Common Stock (no par value, 296,100 shares issued and outstanding) $1,501,800
Retained Earnings ($266,600 - $88,300 + $302,500 net income) = $480,800
Total Shareholders' Equity $1,982,600