Reference no: EM131295583
Earnhardt Corporation has outstanding 3,051,000 shares of common stock of a par value of $10 each. The balance of in it's retained earnings account at January 1, 2014, was $24,730,000, and it then had Paid-in Capital in Excess of par - common stock of $5,010,000. During 2014, the company's net income was $4,725,000. A cash dividend of $ 0.50 a share was declared on May 5, 2014, and was paid June 30, 2014, and a 5% stock dividend was declared on November 30, 2014, and distributed to stockholders of record at the close of business on December 31, 2014. You have been asked to advise on the proper accounting treatment of the stock dividend.
The existing stock of the company is quoted on a national stock exchange. The market price of the stock has been as follows. October 31, 2014. $33 $November 30, 2014. $33 6
December 31, 2014. $39
a. Prepare the journal entry to record the declaration of the cash dividend on May
May 5th - 2 entries
b. Prepare the journal entry to record the payment of the cash dividend on N
June 30th - 2 entries
c. Prepare the journal entry to record the declaration of the stock dividend on November 30 - 3 entries
d. Prepare the journal entry to record the distribution of the stock dividend on December 31 - 2 entries
e . Prepare the stockholders equity section (including schedules of retained earnings and additional Paid-in Capital ) of the balance sheet of Earnhardt Corporation for the year 2014 on the basis of the foregoing information.
1e. Prepare the schedule of additional Paid-in Capital for the year ended December 31, 2014
1b. Prepare the statement of retained earnings for the year ended December 31, 2014
1c. Prepare the stockholders equity section for December 31,2014.
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