Instructions Advanced Life Co. is an HMO for businesses in the Albuquerque area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (600,000 shares authorized; 400,000 shares issued), S8 par, $3,200,000; Paid-in capital in excess of par-common stock, S800,000; and Retained eamings, $25,600,000. The board of directors declared a 2% stock dividend when the market price of the stock was S19 a share. Advanced Life Co. reported no income or loss for the current year. Required: a. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the chart of accounts for the exect wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders'equity. c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year (1) total paid- in capital, (2) total retained earnings, and (3) total stockholders' equity.
Instructions Advanced Life Co. is an HMO for businesses in the Albuquerque area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (600,000 shares authorized; 400,000 shares issued), S8 par, $3,200,000; Paid-in capital in excess of par-common stock, S800,000; and Retained eamings, $25,600,000. The board of directors declared a 2% stock dividend when the market price of the stock was S19 a share. Advanced Life Co. reported no income or loss for the current year. Required: a. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the chart of accounts for the exect wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders'equity. c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year (1) total paid- in capital, (2) total retained earnings, and (3) total stockholders' equity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Journal
a. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the issuance of the stock certificates on December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use
lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
PAGE 10
JOURNAL
ACCOUNTING EQUATION
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
ASSETS
LIABILITIES
EQUITY
1
Transcribed Image Text:Instructions
Advanced Life Co. is an HMO for businesses in the Albuquerque area. The following account balances appear on the balance sheet of Advanced Life Co.: Common stock (600,000 shares authorized; 400,000 shares issued), S8 par. $3,200,000; Paid-in capital in excess of par-common
stock, S800,000; and Retained earnings, $25,600,000. The board of directors declared a 2% stock dividend when the market price of the stock was $19 a share. Advanced Life Co. reported no income or loss for the current year.
Required:
a. Journalize the entries to record (1) the declaration of the dividend on December 1, capitalizing an amount equal to market value, and (2) the
issuance of the stock certificates on December 31. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do
not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a
credit entry when a credit amount is entered.
b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total
stockholders' equity
c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-
in capital, (2) total retained earnings, and (3) total stockholders'equity.
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