Question
Stock Dividends The Stockholders Equity category of Worthy Companys balance sheet as of January 1, 2016, appeared as follows: Common stock, $10 par, 40,000 shares
Stock Dividends
The Stockholders Equity category of Worthy Companys balance sheet as of January 1, 2016, appeared as follows:
| Common stock, $10 par, 40,000 shares issued and outstanding | $400,000 |
| Additional paid-in capital | 100,000 |
| Retained earnings | 400,000 |
| Total stockholders equity | $900,000 |
The following transactions occurred during 2016:
- Declared a 10% stock dividend to common stockholders on January 15. At the time of the dividend, the common stock was selling for $30 per share. The stock dividend was to be issued to stockholders on January 30, 2016.
- Distributed the stock dividend to the stockholders on January 30, 2016.
Required:
Question Content Area
1. Record the 2016 events. Indicate the effect on financial statement items by selecting "" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement.
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| Jan. 15 | Additional Paid-In Capital-CommonCommon StockCommon Stock Dividend DistributableRetained EarningsStock Dividend Expense | fill in the blank fd222001d05bfa8_2 | +-NE | +-NE | +-NE | +-NE | +-NE | +-NE | |||||||
| CashCommon StockCommon Stock Dividend DistributableRetained EarningsStock Dividend Expense | fill in the blank fd222001d05bfa8_10 | +-NE | +-NE | +-NE | +-NE | +-NE | +-NE | ||||||||
| Additional Paid-In Capital-CommonCashDividends PayableRetained EarningsStock Dividend Expense | fill in the blank fd222001d05bfa8_18 | +-NE | +-NE | +-NE | +-NE | +-NE | +-NE | ||||||||
Question Content Area
| Journal | Balance Sheet | Income Statement | |||||||||||||
| Stockholders | Net | ||||||||||||||
| Date | Description | Debit | Credit | Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | |||
| Jan. 30 | CashCommon StockCommon Stock Dividend DistributableRetained EarningsStock Dividend Expense | fill in the blank dada4401601c035_2 | +-NE | +-NE | +-NE | +-NE | +-NE | +-NE | |||||||
| CashCommon StockCommon Stock Dividend DistributableRetained EarningsStock Dividend Expense | fill in the blank dada4401601c035_10 | +-NE | +-NE | +-NE | +-NE | +-NE | +-NE | ||||||||
Question Content Area
2. Develop the Stockholders' Equity category of Worthy Company's balance sheet as of January 31, 2016, after the stock dividend was issued.
| Stockholders' equity | |
| Common stockCommon stock dividend distributableCommon stock, $10 par, 44,000 shares issued and outstanding | $- Select - |
| Additional paid-in capital-commonCommon stockCommon stock dividend distributable | - Select - |
| Common stockCommon stock dividend distributableRetained earnings | - Select - |
| Total stockholders' equity | $fill in the blank a4a310fedfd0fb8_7 |
Question Content Area
What effect did those transactions have on total stockholders equity?
These transactions
increasedecreasedid not change
total stockholders' equity. They reclassified some equity from the
retained earningscontributed capital
category to the
retained earningscontributed capital
category.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
SAP Audit Black Book
Authors: Bhushan Jairamdas Mamtani
1st Edition
9351194086, 978-9351194088
