Analyzing and Identifying Financial Statement Effects of Dividends

The stockholders$$ equity of Kinney Company at December $31,2021,$ is shown below:

$5\%$ preferred stock, $$100$ par value, $10,000$ shares authorized;

Shares issued and outstanding $(1)$ $$350,000$

Common stock, $$5$ par value, $200,000$ shares authorized;

Shares issued and outstanding $(2)225,000$

Paid$-$in capital in excess of par value$$preferred stock $36,000$

Paid$-$in capital in excess of par value$$common stock $270,000$

Retained earnings $590,400$

Total stockholders$$ equity $$1,471,400$

$(1)5,250$ shares at $$100$ par value.

$(2)67,500$ shares at $$5$ par value.

The following transactions, among others, occurred during $2022.$

Apr. $1$ Declared and issued a $100\%$ stock dividend on all outstanding shares of common stock. The market value of the stock was $$11$ per share.

Dec. $7$ Declared and issued a $3\%$ stock dividend on all outstanding shares of common stock. The market value of the stock was $$14$ per share.

Dec. $20$ Declared and paid $(1)$ the annual cash dividend on the preferred stock and $(2)$ a cash dividend of $80$ cents per common share.

a$.$ Prepare the journal entries for these transactions.

Date Account Debit Credit

Apr. $1$

Retained earnings

$0$

$1,100,000$

Answer

$0$

$0$

Answer

To record $100\%$ stock dividend.

Dec. $7$

$0$

$0$

Answer

$0$

$0$

Answer

$0$

$0$

Answer

To record $3\%$ stock dividend.

Dec. $20$

$0$

$0$

Answer

$0$

$0$

Answer

To record cash dividend.

b$.$ Post the journal entries to the related T$-$accounts.

Note: Enter your answers, in transaction order, in the first open field of the appropriate column in each account.

Cash

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Additional paid$-$in capital

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Common stock

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Retained earnings

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

c$.$ Prepare a $2022$ retained earnings reconciliation assuming that the company reports $2022$ net income of $$227,700.$

Note: Use negative signs with your answers, when appropriate.

Kinney Company

Statement of Retained Earnings

For the Year Ended Dec. $31$

Retained earnings, December $31,2021$

Answer

Answer

Answer

Answer

Answer