Question

L. HW. Saved The equity sections from Atticus Group's 2016 and 2017 year-end balance sheets follow Stockholders' Equity (December 31, 2016) Common stock-$4 par value, 100,000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings $160,000 120,000 320,000 $ 600,000 Total stockholders' equity Stockholders' Equity (December 31, 2017) Common stock-$4 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury Paid-in capital in excess of par value, common stock Retained earnings ($30,000 restricted by treasury stock) $189,600 179,200 400,000 768,800 Less cost of treasury stock (30,000) Total stockholdera' equity $738,800 The following transactions and events affected its equity during year 2017 5 Declared a $0.50 per share cash dividend, date of record January 10. Jan Mar. 20 Purchased treasury stock for cash. 5 Declared a $0.50 per share cash dividend, date of record April 10. Apr. July 5 Declared a $0.50 per share cash dividend, date of record July 10. July 31 Declared a 20% stock dividend when the stock's market value was $12 per sha: Aug. 14 Issued the stock dividend that was declared on July 31. 5 Declared a $0.50 per share cash dividend, dato of record October 10. Oct. General General Cash Requirement Trial Balance Stock Dividend Journal Ledger Dividends The following transactions and events affected its equity during 2017. Prepare the journal entr and then agree the year-end balances with the December 31, 2017 Stockholders' Equity statemen View transaction list View journal entry worksheet < Prev 2 of 2 Next

Answer 1

Atticus Group Credit Debit Calculation Date Account 5-Jan Common Cash Dividend 20,000 40,000*0.50 Dividends Payable 20,000 20-Mar Treasury Stock 30,000 Cash 30,000 - (40,000-3,000)*0.50 5-Apr Common Cash Dividend 18,500 Dividends Payable 18,500 5-Jul Common Cash Dividend =(40,000-3,000)* 18,500 0 Dividends Payable 18,500 (40,000-3,000)*20%) *12 31-Jul Common Stock Dividend 88,800 Common Stock Dividend Distributable 29,600 (40,000-3,000) 20%)*4 Paid in Capital in Excess of Par Value-CS 59,200 14-Aug Common Stock Dividend Distributable 29,600 Common Stock 29,600 5-Oct Common Cash Dividend 22,200 Workings below Dividends Payable 22,200 31-Dec Retained Earnings 168,000 Common Cash Dividend 79,200 Common Stock Dividend 88,800 31-Dec Income Summary 248,000 Retained Earnings 248,000 Workings 5-Oct Common Dividend Declared Opening Shares Treasury Stock purchased 40,000 (3,000) Subtotal 37,000 -37,000*20% 20% Stock Dividend 7,400 Number of Common Shares 0/s 44,400 Cash Dividend per share 0.50 Common Dividend Declared 44,400*0.50 22,200 Dividend is paid on O/s comn mmon shares excluding treasury shares Note

Atticus Group T Accounts Date Debit Credit Debit Date Credit Date Date Common Stock Paid in Capital in Excess of Par Value-CS Op bal 31-Jul $ Op bal 14-Aug $ 29,600 $ 120,000 $160,000 59,200 $ 189,600 Bal. $179,200 Bal Retained Earnings Treaury Stock 79,200 Op bal 20-Mar 30,000 31-Dec $ $320,000 31-Dec $ 31-Dec $ 248,000 88,800 $400,000 $30,000 Bal Bal Workings As closing balance is 400,000 in Retained Earnings, we have Net Income as follows Closing Balancce less Opening Balance plus Dividends -400,000-320,000+79, 200+88, 800 $248,000

Answer 2

amount of retained earnings transferred to paid-in capital Accounts 

40000-3000 = 37000

37000*20% = 7400

7400*12 = 88,800