Question
Exercise 18-23 Transactions affecting retained earnings [LO18-6, 18-7, 18-8] The balance sheet of Consolidated Paper, Inc., included the following shareholders equity accounts at December 31,
Exercise 18-23 Transactions affecting retained earnings [LO18-6, 18-7, 18-8]
The balance sheet of Consolidated Paper, Inc., included the following shareholders equity accounts at December 31, 2015: Paid-in capital: Preferred stock, 6.5%, 89,000 shares at $1 par $ 89,000 Common stock, 383,900 shares at $1 par 383,900 Paid-in capitalexcess of par, preferred 1,515,000 Paid-in capitalexcess of par, common 2,565,000 Retained earnings 8,945,000 Treasury stock, at cost; 3,900 common shares (46,800 ) Total shareholders' equity $ 13,451,100
During 2016, several events and transactions affected the retained earnings of Consolidated Paper. Required: 1. Prepare the appropriate entries for these events. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. On March 3 the board of directors declared a property dividend of 250,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $981,000). The investment shares had a fair value of $4 per share and were distributed March 31 to shareholders of record March 15.
b. On May 3 a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $12 per share.
c. On July 5 a 3% common stock dividend was declared and distributed. The market value of the common stock was $12 per share.
d. On December 1 the board of directors declared the 6.5% cash dividend on the 89,000 preferred shares, payable on December 28 to shareholders of record December 20.
e. On December 1 the board of directors declared a cash dividend of $0.40 per share on its common shares, payable on December 28 to shareholders of record December 20.
2. | Prepare the shareholders' equity section of the balance sheet for Consolidated Paper, Inc. at December 31, 2016. Net income for the year was $790,000. (Negative amounts should be indicated by a minus sign.) |
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