Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockhol
ID: 2492342 • Letter: P
Question
Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockholders’ equity accounts. Common Stock ($24 par value, 59,000 shares issued and outstanding) $1,416,000 Paid-in Capital in Excess of Par—Common Stock 197,000 Retained Earnings 559,000 During the year, the following transactions occurred. Feb. 1 Declared a $3 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 2-for-1 stock split. Prior to the split, the market price per share was $39. July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $14 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.60 per share dividend to stockholders of record on December 15, payable January 5, 2018. 31 Determined that net income for the year was $332,500. Journalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
Enter the beginning balances, and post the entries to the stockholders’ equity accounts. (Note: Open additional stockholders’ equity accounts as needed.) (Post entries in the order of journal entries presented in the previous part.)
Prepare a stockholders’ equity section at December 31. (Enter account name only and do not provide descriptive information.)
Explanation / Answer
(a) Journal entries:
332,500
(b) Enter the beginning balances, and post the entries to the stockholders’ equity accounts.
Common Stock:
Common Stock Dividends Distributable
Paid-in Capital in Excess of Par Value
Retained Earnings
(c) Prepare a stockholders’ equity section at December 31
Common stock, $12 par value, 135,700 shares issued and outstanding
Date entry debit credit Feb. 1 Cash Dividend (59,000shares x $3)Dividend payable 177,000
177,000 Mar. 1 Dividend payable
Cash 177,000
177,000 Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $39.
No entry is required for a stock split, but it should be noted that the no. of shares issued and outstanding is now 59,000 x 2 = 118,000 shares, and the par value is now $12 - - July 1 Stock dividend (118,000 x 15% x $14)
Common Stock Dividend Distributable(118,000 x 15% x $12 par)
Paid-in Capital in Excess of Par Value 247,800
212,400
35,400 July 31 Common Stock Dividend Distributable
Common stock
(The no. of common shares issued and outstanding is now 135,700, i.e., 118,000 plus 15%) 212,400
212,400
Dec. 1 Cash dividend (135,700 x $0.60)
Dividend payable 81,420
81,420 Dec 31 Income summary $350,000
Retained earnings $350,000
332,500