I need help with the journal entries. Each entry image goes with 1-5 at the top.
ID: 2488997 • Letter: I
Question
I need help with the journal entries. Each entry image goes with 1-5 at the top. The "required" is additional information, just the entries are what I need. I put the actual entries on here because each line needs to be filled. The post ref doesn't need to be done and I didn't put the #5 entry because I already did it.
Various Dividends Stamboul Company lists the following condensed balance sheet as of the beginning of 2013 Current assets Ihvestment in Ostend bonds Fixed assets (net) S 60,000 9,000 200,000 69 Current liabilities Common stock, no par Retained eamings 150,000 89,000 69 Stamboul is considering the impact of various types of dividends on this balance sheet. Each dividend would be declared and paid in 2013. These include 1. Cash dividend of $1.00 per share on the 10,000 shares outstanding 2. Stock dividend of 5% on the 10,000 shares outstanding when the market price is $17 per share 3. Property dividend consisting of the $9,000 (book value) investment in Ostend bonds being held to maturity. This investment has a current market value of $13,000. (For Requirement 2, assume any gain or loss is to be reflected in retained earnings. Disregard income taxes.) 4. Scrip dividend of $0.80 per share on the 10,000 shares outstanding. The scrip earns interest at a 12% annual rate and is to be declared on January 30 and paid on December 30, 2013. (For Requirement 2, assume any interest expense is to be reflected in retained earnings. Disregard income taxes.) 5. Cash dividend consisting of a $0.70 per share normal dividend and a $0.30 per share liquidating dividend Required For each preceding independent dividend 1. Prepare the appropriate journal entries for the declaration and payment of the dividend 2. Prepare a condensed balance sheet after the dividend has been paidExplanation / Answer
Entry 1 Date Accounts title Post Ref Dr Cr 1/12/2013 Retained earnings 15000 Divident payable (15000*1) 15000 15/12/2013 Divident payable 15000 Cash 15000 Entry 2 1/12/2013 Retained earnings 12750 Stock dividend payable (15000*5%*$17) 12750 15/12/2013 Stock dividend payable 12750 Common Stock 12750 (being common stock as no par so all amt is credited to it) Entry 3 1/12/2013 Investment in Ostened Bonds (13000-9000) 4000 Gain on appreciation of Ostened Bonds 4000 1/12/2013 Retained earnings 13000 Property dividend payable 13000 15/12/2013 Property dividend payable 13000 Investment in Ostened Bonds 13000 Entry 4 30/01/2013 Retained earnings (15000*.8)+ 12000 Notes payable to stockholder 12000 30/12/2013 Notes payable to stockholder 12000 Interest Expense (12000*12%*11/12) 1320 Cash 13320 Note: It is said to assume in the question that retained earnings should include interest expenses otherwise the interest expense entry is on distribution date so the entry would be 30/01/2013 Retained earnings (15000*.8)+ 13320 +Interest Expense (12000*12%*11/12) Notes payable to stockholder 13320 30/12/2013 Notes payable to stockholder 13320 Cash 13320 Note: dear student in 1,2 and 4 questions the shares mentioned are 1000 different from 15000 shares which are mentioned before each Journal entry. So for your understanding I am doing calculation from both the information For 10000 shares Entry 1 Date Accounts title Post Ref Dr Cr 1/12/2013 Retained earnings 10000 Divident payable (10000*1) 10000 15/12/2013 Divident payable 10000 Cash 10000 Entry 2 1/12/2013 Retained earnings 8500 Stock dividend payable (10000*5%*$17) 8500 15/12/2013 Stock dividend payable 8500 Common Stock 8500 (being common stock as no par so all amt is credited to it) Entry 3 1/12/2013 Investment in Ostened Bonds (13000-9000) 4000 Gain on appreciation of Ostened Bonds 4000 1/12/2013 Retained earnings 13000 Property dividend payable 13000 15/12/2013 Property dividend payable 13000 Investment in Ostened Bonds 13000 Entry 4 30/01/2013 Retained earnings (10000*.8) 8000 Notes payable to stockholder 8000 30/12/2013 Notes payable to stockholder 8000 Interest Expense (8000*12%*11/12) 880 Cash 8880 Note: It is said to assume in the question that retained earnings should include interest expenses otherwise the interest expense entry is on distribution date so the entry would be 30/01/2013 Retained earnings (10000*.8)+ 8880 +Interest Expense (8000*12%*11/12) Notes payable to stockholder 8880 30/12/2013 Notes payable to stockholder 8880 Cash 8880