Question
The balance sheet of Consolidated Paper, Inc., included the following shareholders equity accounts at December 31, 2015: Paid-in capital: Preferred stock, 8.8%, 87,000 shares at
The balance sheet of Consolidated Paper, Inc., included the following shareholders equity accounts at December 31, 2015:
Paid-in capital: | |||
Preferred stock, 8.8%, 87,000 shares at $1 par | $ | 87,000 | |
Common stock, 373,700 shares at $1 par | 373,700 | ||
Paid-in capitalexcess of par, preferred | 1,495,000 | ||
Paid-in capitalexcess of par, common | 2,545,000 | ||
Retained earnings | 8,745,000 | ||
Treasury stock, at cost; 3,700 common shares | (37,000 | ) | |
Total shareholders' equity | $ | 13,208,700 | |
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 235,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $453,000). The investment shares had a fair value of $2 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 $10 per share. |
c. | On July 5 a 2% common stock dividend was declared and distributed. The market value of the common stock was $10 per share. |
d. | On December 1 the board of directors declared the 8.8% cash dividend on the 87,000 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 $0.50 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 $770,000. (Negative amounts should be indicated by a minus sign.) | |
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