Accounting for Corporations: stock issues, cash and stock dividends

Sheet3 Sheet2 Sheet1 Common Stock 100,000 $1 par stocks issued Paid In Capital in excess of Par Retained Earnings The Stock Holders Equity Section of the Balance Sheet of ABC Inc on 31 December 2008 is as follows: The following transactions took place in 2009 1) Declare and pay a 50 cents per share dividend 2) 3) 4) 5 for 1 stock split 5) Declare and distribute a 15% stock dividend when market price is $1.50 per stock 6) Declare a 10 cent per share cash dividend For the above transactions show journals and Stockholders Equity at the 31 December 2009 Total Stock Holders Equity Marks will be given for showing claculations of the value of dividends and for keeping track of the number of stocks issued and their par value Corporations Exam Practice Solution Journals Ref Description Dr Cr Dividend Payable 100,000 $1 par stocks X 50 cents= $50000 Cash Common Stock 150000 $1 par common stocks No of stocks to issue: 150000 X .15 Value at market Dividend value Common stock Common stock div. Distributable PIC Excess Par No transaction Before Stock Split There are now 172500 $1 par common stocks $1 par After Stock Split 20 cent par 172500 stocks before stock dividend Issue 35% more stocks Value at par 20 cents After stock dividend, there are 172500+12075 stocks Equals 184575 stocks Stockholders Equity 31 Dec 2009 Issue 50000 $1 par common Stocks at $2 184575 stocks at 10 cents per stock dividend payable is a liability and doesn’t appear in stockholders equity Note : cash is an asset and doesn't appear in Stock holders Equity Calculations Transaction 1 Transaction 2 Transaction 3 Transaction 4 Transaction 5 Transaction 6 No transaction, but see calculations Declare and distribute a 35% stock dividend when market price is 40 cents per stock 000000.00 000000.00 000000.00 000000.00 0.00 00000.00 000000.00 0.00 00000.00 00000.00 00000.00 0.00 00000.00 00000.00 00000.00 0.00 00000.00 00000.00 00000.00 0.00 00000.00 00000.00 00000.00 0.00 0.00 00000.00 00000.00 00000.00 00000.00 0.00 00000.00 000000.00 0.00 00000.00 000000.00 000000.00 000000.00 000000.00 00000.00 000000.00 0.00 0.00 00000.00 000000.00 000000.00 0.00 00000.00 0.00 00000.00 0.00