Question

Entries for Stock Dividend Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life's balance sheet: Common stock (260,000 shares authorized ; 7,000 shares issued), $100 par, $700,000; Paid-In Capital in excess of par-common stock, $70,000, and Retared earnings, $5,600,000. The board of drectors dedared a 1% stock dvo when the market price of the stock was $139 a share. Healthy Life reported no income or loss for the current year If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required from the dropdown a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value a2. Journalize the entry to record the issuance of the stock certificates b. Determine the following smounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained eamings, and (3) total stocksholders' equity Total paid-in capital Total retained earnings Total stockholders equity c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained eamings and (3) total stockholders equity Total paid-in capital

Answer 1

Part A 1

Accounts title and explanation	debit	credit
Stock dividends (7000*1%*139)	9730
Stock dividend distributable (70*100)		7000
Paid in capital in excess of par - common stock (70*(139-100))		2730

Part A 2

Accounts title and explanation	debit	credit
Stock dividend distributable	7000
Common Stock		7000

Part B

Total paid in capital = $770000 (700000+70000)

total retained earnings = $560000

total stockholders’ equity = $1330000 (770000+560000)

Part C

total paid-in capital = $779730 (770000+7000+2730)

total retained earnings = $550270 (560000-9730)

total stockholders’ equity= $1330000 (779730+550270)