On January 1, 2014, Prasad Corporation had the following stockholders’ equity accounts.

Common Stock ($25 par value, 48,000 shares issued and outstanding) $1,200,000 Paid-in Capital in Excess of Par—Common Stock 200,000 Retained Earnings 600,000 During the year, the following transactions occurred.

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

Mar. 1 Paid the dividend declared in February.

Apr. 1 Announced a 5-for-1 stock split. Prior to the split, the market price per share was

$36.

July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $7 per share.

31 Issued the shares for the stock dividend.

Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2015.

31 Determined that net income for the year was $350,000.

Instructions

(a) Journalize the transactions and the closing entries for net income and dividends.

(b) Enter the beginning balances, and post the entries to the stockholders’ equity accounts.

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

(c) Prepare a stockholders’ equity section at December 31.