On April 15, the market price of the stock was $14 per share.

May 15 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2015.

31 Determined that net income for the year was $400,000.

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.

(Note: Open additional stockholders’ equity accounts as needed.)

(c) Prepare the stockholders’ equity section of the balance sheet at December 31.

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

AppendixLO1