Reference no: EM132959331

Company A had these stockholders' equity accounts on 1 January 2018:

Common Stock ($25 par value, 80,000 shares issued and outstanding) $2,000,000

Paid-in Capital in Excess of Par Value 250,000

Retained Earnings 850,000

During the year, the following transactions occurred :

Feb 5 : Declared a $2.00 cash dividend per share to stockholders of record on February 15, payable March 5.

Mar. 5 : Paid the dividend declared in February.

July 1 : Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $30 per share.

July 31 : Issued the shares for the stock dividend.

Dec 1. Declared a $2 per share dividend to stockholders of record on December 15, payable January 5, 2019.

Dec 31. Determined that net income for the year was $600,000. The market price of the common stock on this date was $33.

Problem a. Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings)

Problem b. Prepare the stockholders' equity section of the balance sheet at December 31.

Problem c. Calculate the payout ratio and return on common stockholders' equity