Before preparing financial statements for the current year, the chief accountant for Crane Ltd. provided the following information regarding the accounting for dividends and stock splits: 1. Crane has 19,600, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and recorded it as a debit to Dividends Expense and a credit to Cash. 2. A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet. 3. The company declared a 2-for-1 stock split on its 19,600, $4 noncumulative preferred shares. The average per share amount of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,372.000 and a credit to Preferred Shares of $1,372,000. Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit (1) Dec. 31 (To record payment of cash dividend.)
Before preparing financial statements for the current year, the chief accountant for Crane Ltd. provided the following information regarding the accounting for dividends and stock splits: 1. Crane has 19,600, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and recorded it as a debit to Dividends Expense and a credit to Cash. 2. A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet. 3. The company declared a 2-for-1 stock split on its 19,600, $4 noncumulative preferred shares. The average per share amount of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,372.000 and a credit to Preferred Shares of $1,372,000. Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit (1) Dec. 31 (To record payment of cash dividend.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Before preparing financial statements for the current year, the chief accountant for Crane Ltd. provided the following information
regarding the accounting for dividends and stock splits:
1.
Crane has 19,600, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and
recorded it as a debit to Dividends Expense and a credit to Cash.
2.
A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the
declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet.
3.
The company declared a 2-for-1 stock split on its 19,600, $4 noncumulative preferred shares. The average per share amount
of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,372,000 and a
credit to Preferred Shares of $1,372,000.
Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually.If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
(1) Dec. 31
(To record payment of cash dividend.)
(2) Dec. 31
(Torecord declaration of
stock dividend.)
(3) Dec. 31
Transcribed Image Text:Date
Account Titles and Explanation
Debit
Credit
(1) Dec. 31
(To record payment of cash dividend.)
(2) Dec. 31
(To record declaration of
stock dividend.)
(3) Dec. 31
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