On December 31, 2006 the shareholders' equity section on the Balance Sheet of Chaudière Furniture Ltd. showed the following. Preferred shares, $6.00 cumulative, non-participating, no-par 3,000 shares issued and outstanding $ 300,000 Common shares, 15,000 no-par shares issued and outstanding 750,000 Total contributed capital $1,050,000 Retained earnings 2.100.000 Total shareholders' equity $3,150,000 No dividends had been paid during 2005 or 2006. The following transactions took place during 2007. 1.On March 31, Chaudière declared a cash dividend of $ 99,000.00. The dividend was to be paid on April 30 to the shareholders of record on April 15. 2.On June 30, a 5% stock dividend was declared on the common shares. The market price of the common shares at that date was $108.00 per share. 3.On September 30, Chaudière issued a 3-for-1 stock split. The common shares at that point were selling for $120.00 per share. 4.0n December 5, Chaudière declared a cash dividend of $1.00 per share on the common shares to be paid on January 6. 5.At December 31, 2007, net income for the year was determined to be $650,000. Required: 1. Calculate and state the amount of the March 31 dividend for each class of shares. 2. Prepare journal entries to record the declaration of the dividend on March 31 and the payment of the dividend on April 30. 3. Prepare the journal entries to record the stock dividend on June 30.
On December 31, 2006 the shareholders' equity section on the Balance Sheet of Chaudière Furniture Ltd. showed the following. Preferred shares, $6.00 cumulative, non-participating, no-par 3,000 shares issued and outstanding $ 300,000 Common shares, 15,000 no-par shares issued and outstanding 750,000 Total contributed capital $1,050,000 Retained earnings 2.100.000 Total shareholders' equity $3,150,000 No dividends had been paid during 2005 or 2006. The following transactions took place during 2007. 1.On March 31, Chaudière declared a cash dividend of $ 99,000.00. The dividend was to be paid on April 30 to the shareholders of record on April 15. 2.On June 30, a 5% stock dividend was declared on the common shares. The market price of the common shares at that date was $108.00 per share. 3.On September 30, Chaudière issued a 3-for-1 stock split. The common shares at that point were selling for $120.00 per share. 4.0n December 5, Chaudière declared a cash dividend of $1.00 per share on the common shares to be paid on January 6. 5.At December 31, 2007, net income for the year was determined to be $650,000. Required: 1. Calculate and state the amount of the March 31 dividend for each class of shares. 2. Prepare journal entries to record the declaration of the dividend on March 31 and the payment of the dividend on April 30. 3. Prepare the journal entries to record the stock dividend on June 30.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2006 the shareholders' equity section on the Balance Sheet of Chaudière Furniture
Ltd. showed the following.
Preferred shares, $6.00 cumulative, non-participating, no-par
3,000 shares issued and outstanding
$ 300,000
Common shares,
15,000 no-par shares issued and outstanding
750,000
Total contributed capital
$1,050,000
Retained earnings
2.100.000
Total shareholders' equity
$3.150.000
No dividends had been paid during 2005 or 2006.
The following transactions took place during 2007.
1.0n March 31, Chaudière declared a cash dividend of $ 99,000.00. The dividend was to be paid on
April 30 to the shareholders of record on April 15.
2.0n June 30, a 5% stock dividend was declared on the common shares. The market price of the
common shares at that date was $108.00 per share.
3.0n September 30, Chaudière issued a 3-for-1 stock split. The common shares at that point were
selling for $120.00 per share.
4.0n December 5, Chaudière declared a cash dividend of $1.00 per share on the common shares to
be paid on January 6.
5.At December 31, 2007, net income for the year was determined to be $650,000.
Required:
1. Calculate and state the amount of the March 31 dividend for each class of shares.
2. Prepare journal entries to record the declaration of the dividend on March 31 and the
payment of the dividend on April 30.
3. Prepare the journal entries to record the stock dividend on June 30.
4. Prepare the journal entries to record the stock split on September 30
5. Prepare the journal entries to record the dividend declared on December 5.
6. Show the Shareholders' Equity section of the Balance Sheet at December 31, 2007.
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