Question Completion:
On January 1, 2017, Ayayai Corp. had these stockholders’ equity accounts.
Common Stock ($10 par value, 65,000 shares issued and outstanding) $650,000
Paid-in Capital in Excess of Par Value $480,000
Retained Earnings $600,000
Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)
Answer:
Ayayai Corp.
Journal Entries
Jan. 15 Debit Cash Dividends $26,000
Credit Dividends Payable $26,000
To record the declaration of $0.40 cash dividend per share to stockholders of record on January 31, payable February 15.
Feb. 15 Debit Dividend Payable $26,000
Credit Cash $26,000
To record the payment of the cash dividend declared on Jan. 15.
Apr. 15 Debit Stock Dividends $65,000
Credit Dividends Distributable $65,000
To record the declaration of a 10% stock dividend.
May 15 Debit Dividends Distributable $65,000
Credit Common stock $65,000
To record the distribution of the stock dividends.
Dec. 1 Debit Cash Dividends $35,750
Credit Dividends Payable $35,750
To record the declaration of a $0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2023. 71,500 shares.
Dec. 31 Debit Net income $371,000
Credit Retained Earnings $371,000
To transfer the net income determined to retained earnings.
Dec. 31 Debit Retained Earnings $61,750
Credit Cash Dividends $61,750
To close the cash dividends account to retained earnings.
Dec. 31 Debit Retained Earnings $65,000
Credit Stock Dividends $65,000
To close the stock dividends account to retained earnings.
Step-by-step explanation:
a) Data and Analysis:
Jan. 15 Cash Dividends $26,000 Dividends Payable $26,000
$0.40 cash dividend per share to stockholders of record on January 31, payable February 15.
Feb. 15 Dividend Payable $26,000 Cash $26,000
Apr. 15 Stock Dividends $65,000 Dividends Distributable $65,000 10% .
May 15 Dividends Distributable $65,000 Common stock $65,000
Dec. 1 Cash Dividends $35,750 Dividends Payable $35,750
$0.50 per share cash dividend to stockholders of record on December 15, payable January 10, 2023. 71,500 shares
Dec. 31 Net income $371,000 Retained Earnings $371,000
Dec. 31 Retained Earnings $61,750 Cash Dividends $61,750
Dec. 31 Retained Earnings $65,000 Stock Dividends $65,000