Question

On January 1, 2020, Crane Corporation had the following stockholders' equity accounts. Common Stock ($26 par value, 50,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,300,000 194,000 619,000 During the year, the following transactions occurred. Feb. 1 Declared a $2 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 $36. July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $15 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2021. 31 Determined that net income for the year was $393,500.

Answer 1

Answer:

CRANE CORPORATION
Balance Sheet (Partial)
December 31
Stockholders' equity:
Paid-in capital:
Capital Stock:
Common stock	$1,430,000
Additional paid-in capital:
Paid-in capital in excess of par-common stock	$114,000
Total paid-in capital	$1,544,000
Retained earnings	$818,500
Total stockholder's equity	$2,362,500

Calculations:

Feb.1	Cash dividends = Outstanding shares x $2 = 50,000 x $2 = $100,000
Apr.1	Outstanding shares after stock-split = 50,000 x 2 = 100,000 shares, Par value = $26/2 = $13 per share
July 1	Stock dividend = (100,000 shares outstanding x 10%) x $15 market rate = 10,000 x $15 = $150,000
July 31	Common stock = 10,000 x $13 par = $130,000
	Paid-in capital in excess of par = 10,000 x ($15-$13) = $20,000
	Outstanding shares after stock dividend = 100,000 + 10,000 = 110,000 shares
Dec.1	Cash dividends = Outstanding shares x $0.40 = 110,000 x $0.40 = $44,000
Dec.31	Net income = $393,500

	Common stock	Paid-in capital in excess of par	Retained Earnings
Beginning Balance	$1,300,000	$194,000	$619,000
Feb.1 Cash dividends		($100,000)
July 1 Stock dividend declared			($150,000)
July 31 Stock dividend issued	$130,000	$20,000
Dec.1 Cash dividends			($44,000)
Dec.31 Net income			$393,500
Ending balance	$1,430,000	$114,000	$818,500