Problem 11-7A (Part Level Submission) on January 1, 2015, Primo Corporation had

Question

Problem 11-7A (Part Level Submission) on January 1, 2015, Primo Corporation had the following stockholders' equity accounts. 1,129,800 common stock ($ 14 par value, 80,700 shares issued and outstanding) Paid in Capital in Excess of Par Value Common Stock Retained Eaminga 570,900 Duing the year, the fallowing transactions ocurred. Jan. 15 Declared a1.20 cash drvderd per share ta stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in anuary. Apr. 15 Declared d 5% stock dindend to stockholders of record on Apr1 30, distributable May 15. On April 15, the market pree of the stock was $15 per share. May 15 Issued the shares for the stock dividendl. Duly 1 Announced e2-for-1 stok split. The market price per share prior to the arnouncement wes $15. (The new psr value is $7.) Dec. 1 Dedered ‘ $0.50 per 8hsre cash dividend to 5tockholders of record on December 15, payable ]anuary 10, 2016. Dec, 31 Determined thet net income for the year ws: $283,300 (a) Your answer is pertielly correct Try ai oumalize the transactians and the cloaing entnes for net income and dividends. (Credit account titles are autamatically indented whon the amount is entered. Do not indent smanually. amoants-) no eatry is rquired, select "No entry" tor the account titles and enter 0 tor the ount/Desc Credit lan. 1 Feb. 15 Apr July 1 NC Dec.i

Explanation / Answer

PRIMO CORPORATION: 15-Jan Cash dividends ($1.20*80700) = 96840 Dividends payable 96840 15-Feb Dividends payable 96840 Cash 96840 15-Apr Stock dividends (80700*5%*15) 60525 Common stock dividend distributable (4035*$14) 56490 Paid in capital in excess of par value-common stock 4035 15-May Common stock dividend distributable 56490 Common stock, $13 par 56490 1-Jul No entry required, as there is no change in equity accounts. Number of shares will get doubled from 84,735 to 169,470. 1-Dec Cash dividend (169470*$0.60) = 101682 Dividends payable 101682 31-Dec Income summary 283300 Retained earnings 283300 31-Dec Retained earnings 198522 Cash dividends 198522 31-Dec Retained earnings 60525 Stock dividend 60525

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