Share
Explore BrainMass

Preparing Correcting Entries for the Springer Company

Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the company accounts:

1. The declaration and payment of a $50,000 cash dividend was recorded as a debut to Interest Expense $50,000, and a credit to Cash $50,000.

2. A 10% stock dividend (1,000 shares0 was declared on the $10 par value stock when the market value per share was $16. The only entry made was; Retained Earnings (Dr.) $10,000 and Dividends Payable (Cr.) $10,000. The shares have not been issued.

3. A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.

Instructions:
Prepare the correcting entries at December 31.

Solution Summary

A formatted Excel spreadsheet containing the correcting journal entries to the Springer Company accounts for the period ending December 31 is attached.

$2.19