I need help in preparing the following: 1) record the 2008 transactions in journal form. 2) prepared the stockholders equt7y section of the company balance sheet as of December 31, 2008. Assume net income for the year is $4000, 000
The stockholders equity section of Rigby Moving and Storage Company’s balance sheet as of December 31, 2007, appears at the top of the next page. The company engaged in the following stockholders equity transactions during 2008.
Contributed Capital
Common stock, $2 par value, 3000,000 shares
Authorized, 500,000 shares issued and outstanding
Additional paid-in capital
Total contributed capital
Retained earnings
$1000,000
400,000
1400,00
1080,000
Total Stockholders Equity 2,480,00
Mar. 5 Declared a $.40 per share cash dividend to be paid on April 6 to stockholders of record on March 20.
Mar 20 Date of record
Apri. 6 Paid the cash dividend
June 17 Declared a 10% stock dividend to be distributed August 17 to stockholders of record on August 5.
The market value of the stock was $14 per share.
Aug. 5 Date of Record
17 Distributed the stock dividend
Oct. 2 Split its stock 2 for 1
Dec. 27 Declared a cash dividend of $.20 payable January 27, 2009, to stock holders or record on Janaury 14, 2009
Thank you so much
no longer need answer to this question!
To prepare the journal form of the 2008 transactions and the stockholder's equity section of the balance sheet as of December 31, 2008, we need to analyze each transaction and determine its impact on the stockholder's equity.
1) To record the 2008 transactions in journal form:
a) March 5: Declaration of cash dividend:
- Debit: Retained Earnings ($400,000 x 0.40 = $160,000)
- Credit: Dividends Payable ($400,000 x 0.40 = $160,000)
b) April 6: Payment of cash dividend:
- Debit: Dividends Payable ($160,000)
- Credit: Cash ($160,000)
c) June 17: Declaration of stock dividend:
- Debit: Retained Earnings ($400,000 x 10% = $40,000)
- Credit: Common Stock Dividends Distributable ($400,000 x 10% = $40,000)
d) August 17: Distribution of stock dividend:
- Debit: Common Stock Dividends Distributable ($40,000)
- Credit: Common Stock ($40,000)
e) October 2: Stock split 2 for 1:
- No journal entry required. This transaction does not impact stockholder's equity.
f) December 27: Declaration of cash dividend:
- Debit: Retained Earnings ($400,000 x 0.20 = $80,000)
- Credit: Dividends Payable ($400,000 x 0.20 = $80,000)
2) To prepare the stockholder's equity section of the balance sheet as of December 31, 2008:
Start with the opening balances as of December 31, 2007:
- Common Stock: $3,000,000 (300,000 shares x $2 par value)
- Additional Paid-in Capital: $1,400,000
- Retained Earnings: $1,080,000
- Total Stockholder's Equity: $2,480,000
Add the changes due to the transactions during 2008:
- Cash Dividends: ($160,000 + $80,000) = $240,000
- Stock Dividends: $40,000 (1,000,000 shares x 10% x $14 market value)
Determine the closing balances as of December 31, 2008:
- Common Stock: $3,000,000 (300,000 shares x $2 par value)
- Additional Paid-in Capital: $1,400,000 (no changes)
- Retained Earnings: $1,080,000 - $240,000 = $840,000
- Total Stockholder's Equity: $2,480,000 + $40,000 = $2,520,000
So, the stockholder's equity section of the company's balance sheet as of December 31, 2008, would be as follows:
Common Stock: $3,000,000
Additional Paid-in Capital: $1,400,000
Retained Earnings: $840,000
Total Stockholder's Equity: $2,520,000