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Business, 08.11.2019 05:31 lkmarus

Senior life co. is an hmo for businesses in the portland area. the following account balances appear on the balance sheet of senior life co.: common stock (800,000 shares authorized; 500,000 shares issued), $4 par, $2,000,000; paid-in capital in excess of par—common stock, $1,000,000; and retained earnings, $33,500,000. the board of directors declared a 2% stock dividend when the market price of the stock was $13 a share. senior 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 exact wording of account titles.
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.

chart of accounts
senior life co.
general ledger
assets
110 cash
120 accounts receivable
131 notes receivable
132 interest receivable
141 merchandise inventory
145 office supplies
151 prepaid insurance
181 land
193 equipment
194 accumulated depreciation-equipment
liabilities
210 accounts payable
221 notes payable
226 interest payable
231 cash dividends payable
236 stock dividends distributable
241 salaries payable
261 mortgage note payable
equity
311 common stock
312 paid-in capital in excess of par-common stock
315 treasury stock
321 preferred stock
322 paid-in capital in excess of par-preferred stock
331 paid-in capital from sale of treasury stock
340 retained earnings
351 cash dividends
352 stock dividends
390
income summary

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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