Problem 11-4A (Part Level Submission) On January 1, 2017, Geffrey Corporation ha
ID: 2481881 • Letter: P
Question
Problem 11-4A (Part Level Submission) On January 1, 2017, Geffrey Corporation had the following stockholders' equity accounts. Common Stock ($26 par value, 50,000 shares issued and outstanding) 1,300,000 Paid-in Capital in Excess of Par-Common Stock Retained Earnings 194,000 619,000 During the year, the following transactions occurred. Feb. 1 Mar. 1 Apr. 1 July 1 31 Dec. 1 31 Declared a $2 cash dividend per share to stockholders of record on February 15, payable March 1 Paid the dividend declared in February. Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36. 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 $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2018. Determined that net income for the year was $393,500. (a)Explanation / Answer
I have used retained earning to debit the cash dvidend and stock dividend as per current practice follwed: So retained earning balance updated from the beginning, no need to additionally close retained earning at year end.
Journal Entries Date Account Title Dr $ Cr $ Feb 1. Retained Earning 100,000 Dividend Payable 100,000 Mar 1. Cash 100,000 Dividend Payable 100,000 Apr 1. no entry Jul 1. Stock Dividend Payable 150,000 Retained Earning 150,000 ( declaration of stock dividend) Jul 31. Stock Dividend Payable 150,000 Common Stock ($13 par ) 130,000 Paid In Capital In Excess of Par -Common Stock 20,000 ( issue of stock dividend ) Dec 1. Retained Earning 44,000 Dividend Payable 44,000 Dec 31. Income Summray 393,500 Retained Earning 393,500