Reference no: EM131294567
Earnhardt Corporation has outstanding 3,051,000 shares of common stock of a par value of $10 each. The balance in its 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 on 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- $36
December 31, 2014- $39
a. Prepare the journal entry to record the declaration of the cash dividend - 2 entries May 5th
b. Prepare the journal entry to record the payment of the cash dividend - 2 entries June 30
c. Prepare the journal entry to record the declaration of the stock dividend - 3 entries Nov. 30
d. Prepare the journal entry to record the distribution of the stock dividend - 2 entries December 31
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 foregoing information. (List items that increase retained earnings first
1st Schedule of Additional Paid-in Capital for the year ended December 31,2014- 3 entries
2nd Statement of Retained Earnings for the year ended December 31, 2014
- 6 entries
3rd Stockholders Equity December 31, 2014- 4 entries
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: Earnhardt Corporation has outstanding 3,051,000 shares of common stock of a par value of $10 each. The balance in its 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..
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