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P14-1A Carolinas Company Journal Entries

On January 1, 2010, Carolinas Corporation had the following stockholders' equity accounts.

Common Stock ($20 par value, 60,000 shares issued and outstanding) - $1,200,000
Paid-in Capital in Excess of Par Value - $200,000
Retained Earnings - $600,000

During the year, the following transactions occurred.
Feb. 1 - Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 - Paid the dividend declared in February.
Apr. 1 - Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36.
July 1 - Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $13 per share.
July 31 - Issued the shares for the stock dividend.
Dec. 1 - Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2011.
Dec. 31 - Determined that net income for the year was $350,000.

Journalize the transaction and the closing entry for net income.
Enter the beginning balances, and post the entries to the stockholders' equity accounts.

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Solution Summary

On January 1, 2010, Carolinas Corporation had the following stockholders' equity accounts.

Common Stock ($20 par value, 60,000 shares issued and outstanding) - $1,200,000
Paid-in Capital in Excess of Par Value - $200,000
Retained Earnings - $600,000

During the year, the following transactions occurred.
Feb. 1 - Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 - Paid the dividend declared in February.
Apr. 1 - Announced a 2-for-1 stock split. Prior to the split, the market price per share was $36.
July 1 - Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $13 per share.
July 31 - Issued the shares for the stock dividend.
Dec. 1 - Declared a $0.50 per share dividend to stockholders of record on December 15, payable January 5, 2011.
Dec. 31 - Determined that net income for the year was $350,000.

Journalize the transaction and the closing entry for net income.
Enter the beginning balances, and post the entries to the stockholders' equity accounts.

$2.19