Based on the following information what would the general journal look like, as well as the cash dividends, and the amount of retained earnings to be capitalized as a result of the stock dividend? The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow. Stockholders’ Equity (January 1) Common stock—$4 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 160,000 Paid-in capital in excess of par value, common stock 120,000 Retained earnings 320,000 Total stockholders’ equity $ 600,000 Stockholders’ Equity (December 31) Common stock—$4 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury $ 189,600 Paid-in capital in excess of par value, common stock 179,200 Retained earnings ($30,000 restricted by treasury stock) 400,000 768,800 Less cost of treasury stock (30,000) Total stockholders’ equity $ 738,800 The following transactions and events affected its equity during the year. January 5 Declared a $0.50 per share cash dividend, payable on January 10. March 20 Purchased treasury stock for cash. April 5 Declared a $0.50 per share cash dividend, payable on April 10. July 5 Declared a $0.50 per share cash dividend, payable on July 10. July 31 Declared a 20% stock dividend when the stock’s market value was $12 per share. August 14 Issued the stock dividend that was declared on July 31. October 5 Declared a $0.50 per share cash dividend, date of record October 10.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Based on the following information what would the general journal look like, as well as the cash dividends, and the amount of retained earnings to be capitalized as a result of the stock dividend?

The equity sections for Atticus Group at the beginning of the year (January 1) and end of the year (December 31) follow.

Stockholders’ Equity (January 1)
Common stock—$4 par value, 100,000 shares authorized, 40,000 shares issued and outstanding	$ 160,000
Paid-in capital in excess of par value, common stock	120,000
Retained earnings	320,000
Total stockholders’ equity	$ 600,000

Stockholders’ Equity (December 31)
Common stock—$4 par value, 100,000 shares authorized, 47,400 shares issued, 3,000 shares in treasury	$ 189,600
Paid-in capital in excess of par value, common stock	179,200
Retained earnings ($30,000 restricted by treasury stock)	400,000
	768,800
Less cost of treasury stock	(30,000)
Total stockholders’ equity	$ 738,800

The following transactions and events affected its equity during the year.

January 5	Declared a $0.50 per share cash dividend, payable on January 10.
March 20	Purchased treasury stock for cash.
April 5	Declared a $0.50 per share cash dividend, payable on April 10.
July 5	Declared a $0.50 per share cash dividend, payable on July 10.
July 31	Declared a 20% stock dividend when the stock’s market value was $12 per share.
August 14	Issued the stock dividend that was declared on July 31.
October 5	Declared a $0.50 per share cash dividend, date of record October 10.