Advanced Life Co. is an HMO for businesses in the Portland area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock

The stock outstanding when a corporation has issued only one class of stock.

(800,000 shares authorized; 460,000 shares issued), $5 par

The monetary amount printed on a stock certificate.

, $2,300,000; Paid-in capital

Capital contributed to a corporation by the stockholders and others.

in excess of parcommon stock, $850,000; and Retained earnings

Net income retained in a corporation.

, $34,950,000. The board of directors declared a 2% stock

Shares of ownership of a corporation.

dividend when the market price of the stock was $15 a share. Advanced Life Co. reported no income or loss for the current year.

Required:

A.

Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles.

B.

Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders equity

The owners' equity in a corporation.

.

C.

Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders equity

CHART OF ACCOUNTS

Advanced Life Co.

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Notes Receivable
132	Interest Receivable
141	Merchandise Inventory
145	Office Supplies
151	Prepaid Insurance
181	Land
193	Equipment
194	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Notes Payable
226	Interest Payable
231	Cash Dividends Payable
236	Stock Dividends Distributable
241	Salaries Payable
261	Mortgage Note Payable

EQUITY

311

Common Stock

312

Paid-In Capital in Excess of Par-Common Stock

315

Treasury Stock

321

Preferred Stock

322

Paid-In Capital in Excess of Par-Preferred Stock

331

Paid-In Capital from Sale of Treasury Stock

340

Retained Earnings

351

Cash Dividends

352

Stock Dividends

390

Income Summary

A. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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