The stockholders’ equity of Cyclone Corporation at January 1 follows:6 Percent preferred stock, $10 par value, 40,000 shares authorized; 25,000 shares issued and outstanding$250,000Common stock, $1 par value, 300,000 shares authorized; 80,000 shares issued and outstanding80,000Paid-in capital in excess of par value—Common stock560,000Retained earnings830,000Total Stockholders’ Equity$1,720,000 The following transactions, among others, occurred during the year:June18Declared a 60 percent stock dividend on all outstanding shares of common stock. The market value of the stock was $14 per share.July1Issued the stock dividend declared on June 18.Dec.20Declared the annual cash dividend on the preferred stock and a cash dividend of $1.60 per share on the common stock, payable on January 20 to stockholders of record on December 28. Requireda. Prepare journal entries to record the foregoing transactions.General JournalDateDescriptionDebitCreditJun.18AnswerAnswerAnswer AnswerAnswerAnswer Declared stock dividend. Jul.1AnswerAnswerAnswer AnswerAnswerAnswer Issued common shares as stock dividend. Dec.20AnswerAnswerAnswer AnswerAnswerAnswer Dividends Payable - Common StockAnswerAnswer Declared a cash dividend on preferred and common stock outstanding. b. Prepare a statement of retained earnings. The net income for the year is $410,000.Do not use negative signs with your answers.CYCLONE CORPORATIONStatement of Retained EarningsFor the Year Ended December 31 Retained Earnings, January 1 Answer Answer Answer Answer AnswerAnswer Stock Dividends DeclaredAnswerAnswer Answer Answer

Requirement a.General journal Date Description…

Answered: The stockholders’ equity of Cyclone…

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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The stockholders’ equity of Cyclone Corporation at January 1 follows:

6 Percent preferred stock, $10 par value, 40,000 shares authorized;
25,000 shares issued and outstanding	$250,000
Common stock, $1 par value, 300,000 shares authorized; 80,000 shares
issued and outstanding	80,000
Paid-in capital in excess of par value—Common stock	560,000
Retained earnings	830,000
Total Stockholders’ Equity	$1,720,000

The following transactions, among others, occurred during the year:

June	18	Declared a 60 percent stock dividend on all outstanding shares of common stock. The market value of the stock was $14 per share.
July	1	Issued the stock dividend declared on June 18.
Dec.	20	Declared the annual cash dividend on the preferred stock and a cash dividend of $1.60 per share on the common stock, payable on January 20 to stockholders of record on December 28.

Required

a. Prepare journal entries to record the foregoing transactions.

General Journal
Date	Description	Debit	Credit
Jun.18	Answer	Answer	Answer
	Answer	Answer	Answer
	Declared stock dividend.
Jul.1	Answer	Answer	Answer
	Answer	Answer	Answer
	Issued common shares as stock dividend.
Dec.20	Answer	Answer	Answer
	Answer	Answer	Answer
	Dividends Payable - Common Stock	Answer	Answer
	Declared a cash dividend on preferred and common stock outstanding.

b. Prepare a statement of retained earnings. The net income for the year is $410,000.

Do not use negative signs with your answers.


Retained Earnings, January 1		Answer
Answer		Answer
		Answer
Answer	Answer
Stock Dividends Declared	Answer	Answer
Answer		Answer

Expert Solution

Step 1

Requirement a.General journal

Date	Description	Debit	Credit
June 18	Stock dividend	$48,000
	Stock dividends distributable		$48,000
	( Declared stock dividend)
Jul.1	Stock dividend distributable	$48,000
	Common stock		$48,000
	(Issued common shares as stock dividend)
Dec. 20	Cash dividends	$219,800
	Dividend Payable- Preferred stock		$15,000
	Dividend Payable-common stock(80,000 1.60 +48,0001.60)		$204,800
	(Declared a cash dividend on preferred and comon stock outstanding)

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