Question
Below is the stockholders'equity section of the balance sheet for RE Company ai 12/31/xO: COMMON STOCK ($10 PAR) PIC>PAR ON COMMON STOCK RETAINED EARNINGS: APPROPRIATED
Below is the stockholders'equity section of the balance sheet for RE Company ai 12/31/xO:
COMMON STOCK ($10 PAR) PIC>PAR ON COMMON STOCK RETAINED EARNINGS:
APPROPRIATED FOR PLANT EXPANSION APPROPRIATED - BOND COVENANT UNAPPROPRIATED
TOTAL STOCKHOLDERS'EQUITY The maximum dividend that RE Company can pay
1,000,000 1,10! ,DOO 3,05t',DQ0
$1,900,000 2,400,000
5,150.000 $9,450,000
1
. Component of Stockholders' Equity | Available for Dividends? Yes/No-Why? | Amount Available for Dividends |
Common Stock | ||
PIC>Paron CS | ||
R/E - Appropriated for Plant Expansion | ||
R/E - Appropriated for Bond Covenant | ||
R/E - Unappropriated | ||
Total Available (Maximum Potential Dividend) |
2.
The maximum non-liquidating dividend RE Company can pay is
Available for Dividends | Amount available for non-liquidating Dividends |
PIC>Paron CS | |
R/E - Appropriated for Plant Expansion | |
R/E - Unappropriated | |
Total Available for non-liquidating dividends |
3. a.
b.
Record the following transactions and events that occurred during 20x1 : Declared a dividend of $1.50 per share
Retained Earnings Dividends Payable
Paid the above dividend Dividends Payable
Cash
ACC 302 - Retained Earnings
c.
Declared a dividend to give stockholders stock owned by RE Company in QBM Co. stock is on the books of RE Company at $620,000. The market value of the QBM stock is $780,000.
Investment in QBM Stock Gain on QBM Stock
Retained Earnings Property Dividend Distributed
Declared a 10% stock dividend. The market price of the stock is $47.
Retained Earnings CS Dividend Distributable
Paid-in Capital in Excess of Par-CS
Appropriated $30,000 for plant expansion
Retained Earnings RE - Appropriated for Plant Expansion
Eliminated the appropriation for bonds RE - Appropriate for Bonds Retained Earnings
Declared a 30% stock dividend. The market price of the stock is $43. For simplicity, ignore the previous declaration of the 10% stock dividend.
Retained Earnings CS Dividend Distributable
d.
e.
f.
g.
h.
i.
Declared a 2-for-1 stock split.
4.
A prior period adjustment increased ACCUMULATED DEPRECIATION (ignore tax effect) by $22,000.
Retained Earnings Accumulated Depreciation
Complete This Exercise at Home & Turn in Next Class Period for a Grade Prepare a Statement of Retained Earnings at 12/31/x1. Net income was $560,000.
ACC 302 - Retained Earnings
5. a.
Make journal entries to
Issue the property dividend. The value of the QBM stock at issuance to RE stockholders is $765,000.
b.
Issue the 10% stock dividend. The market price of the stock is $44.
c.
Issue the 30% stock dividend
d.
Issue the 2-for-1 split.
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