Problem 11-7A (Part Level Submission) On January 1, 2015, Primo Corporation had
ID: 2595479 • Letter: P
Question
Problem 11-7A (Part Level Submission)
On January 1, 2015, Primo Corporation had the following stockholders' equity accounts.
Problem 11-7A (Part Level Submission) On January 1, 2015, Primo Corporation had the following stockholders' equity accounts Common Stock ($12 par value, 81,700 shares issued and outstanding) $980,400 Paid-in Capital in Excess of Par Value-Common Stock Retained Earnings 210,500 516,000 During the year, the following transactions occurred Jan. 15 Feb. 15 Apr. 15 Declared a $1.00 cash dividend per share to stockholders of record on January 31, payable February 15 Paid the dividend declared in January Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15, On April 15, the market price of the stock was $15 per share May 15 Issued the shares for the stock dividend July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $14. (The new par value is $6.) Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2016 Dec. 31 Determined that net income for the year was $237,400 (a) ournalize the transactions and the closing entries for net income and dividends. (Credit account titles are automatically indented when the 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.) Debit Credit Date Account/Description Jan. 15 Retained Earnings Dividends Payable Feb. 15 Apr. 15 May 15 July 1 Dec.1 Dec. 31 To close net income.) Dec.31 To close cash dividends.) Dec. 31Explanation / Answer
Date
Particulars
Dr. $
Cr. $
Jan. 15
Cash Dividend (81,700 Shares@$1)
81,700
Dividends Payable
81,700
Feb 15
Dividends Payable
81,700
Bank
81,700
April 15
Retained earnings [ 8,170 shares @$15]
122,550
Common stock Dividend payable(8170*$12)
98,040
Additional paid in capital
24,510
May 15
Common stock Dividend payable
98,040
Common Stock
98,040
July 1
No Entry*
Dec 1
Cash Dividend (179,740 Shares@$0.6)
107,844
Dividends Payable
107,844
Dec 31
Income Summary
237,400
Retained earnings
237,400
Dec 31
Retained Earnings
189,544
Cash Dividend(81,700 + 107,844)
189,544
Note
There will be no entry for Stock split; a memo will be issued containing details that stock has been split and about new par value.
New shares after Stock Split = (Opening shares + Stock dividend) * 2
= (81,700 + 8,170) * 2
= 179,740 Shares.
New value = $6
Date
Particulars
Dr. $
Cr. $
Jan. 15
Cash Dividend (81,700 Shares@$1)
81,700
Dividends Payable
81,700
Feb 15
Dividends Payable
81,700
Bank
81,700
April 15
Retained earnings [ 8,170 shares @$15]
122,550
Common stock Dividend payable(8170*$12)
98,040
Additional paid in capital
24,510
May 15
Common stock Dividend payable
98,040
Common Stock
98,040
July 1
No Entry*
Dec 1
Cash Dividend (179,740 Shares@$0.6)
107,844
Dividends Payable
107,844
Dec 31
Income Summary
237,400
Retained earnings
237,400
Dec 31
Retained Earnings
189,544
Cash Dividend(81,700 + 107,844)
189,544