Question

Problem 14-03A a-d On January 1, 2020, Wildhorse Corporation had the following stockholders' equity accounts. Common Stock (no par value, 89,000 shares issued and outstanding) Retained Earnings $1,430,000 480,000 During the year, the following transactions occurred. Feb. 1 Mar. 1 Apr. 1 July 1 31 Dec. 1 31 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1. Paid the dividend declared in February. Announced a 3-for-1 stock split. Prior to the split, the market price per share was $40. Declared a 4% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $10 per share. Issued the shares for the stock dividend. Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2021. Determined that net income for the year was $332,000. Prepare the stockholders' equity section of the balance sheet at March 31. (Enter account name only and do not provide descriptive information. Round answers to O decimal places, e.g. 5,250.) WILDHORSE CORPORATION Partial Balance Sheet

Answer 1

A dividend is a pro rata distribution by a corporation based on the shares of a particular class of stock and usually represents a distribution of earnings. Cash dividend is most common type of dividend distribution. below are imporatant terminology and their effects.

Date of Declaration : The date the board of directors formally approves a dividend. On this date, a liability is created (dividend payable) and retained earnings is reduced (debited)

Date of Record : The date the boards of directors specifies as the date the names of the shareholders to receive the dividend are determined.

Date of Payment : The date on which the dividend is actually paid by corporation to the shareholders.

Equity Section of the Balance sheet at March 31

Equity Section of the Balance sheet at March 31	Current Year	Previous year
Common Stock (no par value, 277,680 shares issued and outstanding)	1,536,800	1,430,000
Retained Earnings	477,360	480,000
Total	2,014,160	1,910,000

Statement of changes in Shareholders' Equity

Description	Total	Common Stock	Retained Earnings
Beginning Balance	1,910,000	1,430,000	480,000
Net Income for the year	332,000		332,000
Cash Dividend	(227,840)		(227,840)
Stock Dividend	-	106,800	(106,800)
Ending Balance	2,014,160	1,536,800	477,360

In this problem below will be journal entires

Declared a $ 1 cash dividend per share to stockholder of record on February 15, payable March 1

Date	Description	Debit	Credit
Feb 01	Retained Earnings (89,000 * 1)	89,000
Feb 01	Dividend payable		89,000

Feb 15, No Accounting Entry

Date	Description	Debit	Credit
Mar 01	Dividend payable	89,000
Mar 01	Cash		89,000

Announced a 3-for-1 stock split,

Stock Split occur when a corporation issue additional share of its own stock (without charge) to its existing's shareholders and reduce the par value per share proportionately. Only a memo entry done to acknowledge a stock split. In this problem share have no par value, only numbers of share will increase.

Before split - Common stock (no par vale, 89,000 issued and outstanding)

After split - Common stock (no par vale, 267,000 issued and outstanding, (89,000 * 3))

Declared a 4% stock dividend to stock holders to record on July15, distributable July 31, the market price of the stock was $ 10 per share

When small stock dividend (generally less than 20%, issue is not expected to affect the market price of stock), The fair market value of the stock dividend at the date of deceleration is transferred from retained earning to common stock.

Number of share issued in stock dividend = 4% of outstanding share = 4% of 267,00 = 10,680

Date	Description	Debit	Credit
Jul 31	Retained Earnings (10,680 * 10)	106,800
Jul 31	Common Stock		106,800

Declared a $ 0.50 per share dividend to stockholders of record on December 15, payable january 5, 2021

Total number of share outstanding on dividend declaration date 277,680 (267,000 + 10680)

Stock dividend and stock split will be considered shares outsating from beining of year.

Date	Description	Debit	Credit
Dec 01	Retained Earnings (277,680 * 0.5)	138,840
Dec 01	Dividend payable		138,840