Question

Entries for Stook olvidendy Senior Life Co. is an MO for businesses in the Portland area. The following account balances appear on the balance sheet of Senior Life Co.: Common stock (430,000 shares authorized: 5,000 shares issued), 550 par, $250,000; Paid In Capital in excess of par common stock, $25,000; and Retained earrings, $2,000,000. The board of directors declared a 15. stock dividend when the market price of the stock was $64 a share. Senior Life Co. 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 amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' 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 earnings, and (3) total stockholders' equity

Answer 1

a1)
Account Titles and Explanation	Debit	Credit
Stock Dividends ( 5,000 shares x 1% x $ 64)	$ 3,200
Stock Dividends Distributable                   ( 5,000 shares x 1% x $ 50)		$ 2,500
Paid in capital in excess of Par-Common Stock - Bal. Fig.		$ 700
(To record the declaration of Dividend )

a2)
Account Titles and Explanation	Debit	Credit
Stock Dividends Distributable	$ 2,500
Common Stock		$ 2,500
(To record the issuance of stock certificate )

b)
Total paid in capital ( $ 250,000 + $ 25,000 )	$ 275,000
Total retained earnings	$ 2,000,000
Total stockholders' Equity	$ 2,275,000

c)
Total paid in capital ( $ 250,000 + $ 25,000 + $ 3,200)	$ 278,200
Total retained earnings ( $ 2,000,000 (-) $ 3,200 )	$ 1,996,800
Total stockholders' Equity	$ 2,275,000