Organic Health Inc. is a distributor of health food products in the Toronto area. The following account balances appear on the balance sheet of Organic Health Inc.: $2 preferred shares (100,000 shares authorized, 20,000 shares issued and outstanding), $2,000,000, Common shares (300,000 shares authorized, 100,000 shares issued and outstanding), $10,000,000, and Retained earnings, $45,000,000. The board of directors declared a 2% share dividend when the market price was $125 per share.
a. Journalize the entries to record
(1) The declaration of the dividend
(2) The issuance of the share certificates.
b. Determine the following amounts before the share dividend was declared:
(1) Total contributed capital,
(2) Total retained earnings,
(3) Total shareholders' equity.
c. Determine the following amounts after the share dividend was declared and closing entries were recorded at the end of the year:
(1) Total contributed capital,
(2) Total retained earnings,
(3) Total shareholders' equity.