**Problem 18-5 (Static) Shareholders' Equity Transactions: Statement of Shareholders' Equity [LO18-6, 18-7, 18-8]** Listed below are the transactions that affected the shareholders' equity of Branch-Rickle Corporation during the period 2021–2023. At December 31, 2020, the corporation's accounts included: | **($ in 000s)** | | |-----------------|----------| | Common stock: 105 million shares at $1 par | $105,000 | | Paid-in capital—excess of par | $630,000 | | Retained earnings | $970,000 | **Transactions:** a. On November 1, 2021, the board of directors declared a cash dividend of $0.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. b. On March 1, 2022, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickle was holding as an investment. The bonds had a fair value of $16 million but were purchased two years previously for $13 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5. c. On July 12, 2022, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $21 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares. d. On November 1, 2022, the board of directors declared a cash dividend of $0.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. e. On January 15, 2023, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $22 per share. f. On November 1, 2023, the board of directors declared a cash dividend of $0.65 per share on its common shares, payable to shareholders of record November 15, to be paid December 1. **Required:** 1. Prepare the journal entries that Branch-Rickle recorded during
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![**Problem 18-5 (Static) Shareholders' Equity Transactions: Statement of Shareholders' Equity [LO18-6, 18-7, 18-8]**
Listed below are the transactions that affected the shareholders' equity of Branch-Rickle Corporation during the period 2021–2023. At December 31, 2020, the corporation's accounts included:
| **($ in 000s)** | |
|-----------------|----------|
| Common stock: 105 million shares at $1 par | $105,000 |
| Paid-in capital—excess of par | $630,000 |
| Retained earnings | $970,000 |
**Transactions:**
a. On November 1, 2021, the board of directors declared a cash dividend of $0.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
b. On March 1, 2022, the board of directors declared a property dividend consisting of corporate bonds of Warner Corporation that Branch-Rickle was holding as an investment. The bonds had a fair value of $16 million but were purchased two years previously for $13 million. Because they were intended to be held to maturity, the bonds had not been previously written up. The property dividend was payable to shareholders of record March 13, to be distributed April 5.
c. On July 12, 2022, the corporation declared and distributed a 5% common stock dividend (when the market value of the common stock was $21 per share). Cash was paid in lieu of fractional shares representing 250,000 equivalent whole shares.
d. On November 1, 2022, the board of directors declared a cash dividend of $0.80 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
e. On January 15, 2023, the board of directors declared and distributed a 3-for-2 stock split effected in the form of a 50% stock dividend when the market value of the common stock was $22 per share.
f. On November 1, 2023, the board of directors declared a cash dividend of $0.65 per share on its common shares, payable to shareholders of record November 15, to be paid December 1.
**Required:**
1. Prepare the journal entries that Branch-Rickle recorded during](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F81f3c13b-c916-4610-ab84-ceb3c5d340e8%2F4f03ebe5-4bb6-42e4-b1f4-b9619c281c61%2Fdtpory_processed.png&w=3840&q=75)
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