Stamboul Company lists the following condensed balance sheet as of the beginning of 2019 STAMBOUL COMPANY Balance Sheet Beginning of 2019 1 Current assets $60,000 00 2 Investment in Ostend bonds 9,000 00 3 Fixed assets (net) 200,000 00 4 $269,000 00 5 Current liabilities $30,000 00 6 Common stock, no par 150,000 00 7 Retained earnings 89,000 00 8 $269,000 00 Stamboul is considering the impact of various types of dividends on this balance sheet Each dividend would be declared and paid in 2019 These include 1 Cash dividend of $1 00 per share on the 15,000 shares outstanding 2 Stock dividend of 5 on the 15,000 shares outstanding when the market price is $17 per share 3 Property dividend consisting of the $9,000 (book value) investment in Ostend bonds being held to maturity This investment has a current market value of $13,000 (For Requirement 2, assume any gain or loss is to be reflected in retained earnings Disregard income taxes ) 4 Scrip dividend of $0 80 per share on the 15,000 shares outstanding The scrip earns interest at a 12 annual rate and is to be declared on January 30 and paid on December 30, 2019 (For Requirement 2, assume any interest expense is to be reflected in retained earnings Disregard income taxes ) 5 Cash dividend consisting of a $0 70 per share normal dividend and a $0 30 per share liquidating dividend Required For each preceding independent dividend 1 Prepare the appropriate journal entries for the declaration and payment or distribution of the dividend 2 Prepare a condensed balance sheet after each dividend has been paid or distributed CHART OF ACCOUNTS Stamboul Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation 191 Investment in Ostend Bonds LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable 271 Dividends Payable 271 1 Dividends Payable Scrip 272 Property Dividends Payable EQUITY 311 Common Stock 315 Common Stock to be Distributed 325 Contributed Capital Distributed as a Liquidating Dividend 331 Retained Earnings REVENUE 411 Sales Revenue 434 Gain on Disposal of Investment EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 09, 2024

Stamboul Company lists the following condensed balance sheet as of the beginning of 2019: STAMBOUL COMPANY Balance Sheet Beginning of 2019 1 Current assets $60,000.00

Stamboul Company lists the following condensed balance sheet as of the beginning of 2019:

STAMBOUL COMPANY

Balance Sheet

Beginning of 2019

1	Current assets	$60,000.00
2	Investment in Ostend bonds	9,000.00
3	Fixed assets (net)	200,000.00
4		$269,000.00
5	Current liabilities	$30,000.00
6	Common stock, no par	150,000.00
7	Retained earnings	89,000.00
8		$269,000.00

Stamboul is considering the impact of various types of dividends on this balance sheet. Each dividend would be declared and paid in 2019. These include:

1.	Cash dividend of $1.00 per share on the 15,000 shares outstanding.
2.	Stock dividend of 5% on the 15,000 shares outstanding when the market price is $17 per share.
3.	Property dividend consisting of the $9,000 (book value) investment in Ostend bonds being held to maturity. This investment has a current market value of $13,000. (For Requirement 2, assume any gain or loss is to be reflected in retained earnings. Disregard income taxes.)
4.	Scrip dividend of $0.80 per share on the 15,000 shares outstanding. The scrip earns interest at a 12% annual rate and is to be declared on January 30 and paid on December 30, 2019. (For Requirement 2, assume any interest expense is to be reflected in retained earnings. Disregard income taxes.)
5.	Cash dividend consisting of a $0.70 per share normal dividend and a $0.30 per share liquidating dividend.

Required:

	For each preceding independent dividend:
	1. Prepare the appropriate journal entries for the declaration and payment or distribution of the dividend.
	2. Prepare a condensed balance sheet after each dividend has been paid or distributed.

CHART OF ACCOUNTS

Stamboul Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
191	Investment in Ostend Bonds

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable
271	Dividends Payable
271.1	Dividends Payable: Scrip
272	Property Dividends Payable

	EQUITY
311	Common Stock
315	Common Stock to be Distributed
325	Contributed Capital Distributed as a Liquidating Dividend
331	Retained Earnings

	REVENUE
411	Sales Revenue
434	Gain on Disposal of Investment

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense