Midge Inc. Shareholder\'s Equity As at Dec. 31,2015 Common Shares, no-par; 500,0

Question

Midge Inc. Shareholder's Equity As at Dec. 31,2015 Common Shares, no-par; 500,000 shares authorized; 80,000 issued and outstanding Retained Earnings» Total Shareholders' Equity 600,000 $1,600,000 2016 Transactions Mar» 3 Issued 5,000 common shares at $20 per share.. June- 11., Declared a cash dividend of $0.25 per share to common shareholders of record on June 25, payable on July 6. Declared a 5% stock dividend to common shareholders of record on September 5, distributable on September 20. The shares were trading for $22 a share on August 21, $24 on September 5, and S26 on September 20.* Aug.q) 21- Nov.

Explanation / Answer

i) Prepare the journal entries as follows:

ii) Prepare stockholders' equity section as follows:

Date Account Titles and Explanation Debit Credit Mar. 3 Cash (5,000 x $20) 100000       Common Stock 100000 Jun. 11 Retained Earnings (85,000 x $0.25) 21250       Dividends Payable 21250 Jul. 6 Dividends Payable 21250       Cash 21250 Aug. 21 Retained Earnings (85,000 x 5% x $22) 93500       Stock Dividends Distributable 93500 Sept. 20 Stock Dividends Distributable 93500       Common Stock 93500 Nov. 1 Cash (3,000 x $25) 75000       Common Stock 75000 Dec. 20 Retained Earnings (92250 x $0.30) 27675       Dividends Payable 27675

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