On January 1, 2014, Lamar Corporation had these stockholders equity accounts. Common Stock ($20 par value, 80,000

Question:

On January 1, 2014, Lamar Corporation had these stockholders’ equity accounts.

Common Stock ($20 par value, 80,000 shares issued and outstanding) $1,600,000

Paid-in Capital in Excess of Par Value 240,000

Retained Earnings 750,000

During the year, the following transactions occurred.

Feb. 1 Declared a $1.00 cash dividend per share to stockholders of record on February 15, payable March 1.

Mar. 1 Paid the dividend declared in February.

July 1 Declared a 15% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $25 per share.

31 Issued the shares for the stock dividend.

Dec. 1 Declared a $1 per share dividend to stockholders of record on December 15, payable January 5, 2015.

31 Determined that net income for the year was $500,000. The market price of the common stock on this date was $32.

Instructions

(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

(b) Enter the beginning balances and post the entries to the stockholders’ equity T-accounts.

(d) Calculate the payout ratio and return on common stockholders’ equity.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...