FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On December 31, 2019, the shareholders' equity section of the balance sheet of R & L Corporation reflected the following:
Common shares (no-par value; authorized 60,000 shares; outstanding 21,000 shares)
Contributed surplus
Retained earnings
$210,000
11,600
71,000
On February 1, 2020, the board of directors declared a 8 percent stock dividend to be issued on April 30, 2020. The market value of
the shares on February 1, 2020, was $16.00 per share.
Required:
1. For comparative purposes, prepare the shareholders' equity section of the balance sheet (a) immediately before the stock dividend
and (b) immediately after the stock dividend. (Amounts to be deducted should be indicated with a minus sign.)
Shareholders' Equity
Before
Stock
Dividend
After
Stock
Dividend
Adjustment
Contributed capital
$ 210,000
16,800 O s 226,800 8
Common shares
Contributed surplus
11,600
10,080
21,680 O
Total contributed capital
221,600
26,880
248,480
Retained earnings
71,000
(26,880)
44,120
Total shareholders' equity
S 292,600
$ 292,600
*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
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Transcribed Image Text:On December 31, 2019, the shareholders' equity section of the balance sheet of R & L Corporation reflected the following: Common shares (no-par value; authorized 60,000 shares; outstanding 21,000 shares) Contributed surplus Retained earnings $210,000 11,600 71,000 On February 1, 2020, the board of directors declared a 8 percent stock dividend to be issued on April 30, 2020. The market value of the shares on February 1, 2020, was $16.00 per share. Required: 1. For comparative purposes, prepare the shareholders' equity section of the balance sheet (a) immediately before the stock dividend and (b) immediately after the stock dividend. (Amounts to be deducted should be indicated with a minus sign.) Shareholders' Equity Before Stock Dividend After Stock Dividend Adjustment Contributed capital $ 210,000 16,800 O s 226,800 8 Common shares Contributed surplus 11,600 10,080 21,680 O Total contributed capital 221,600 26,880 248,480 Retained earnings 71,000 (26,880) 44,120 Total shareholders' equity S 292,600 $ 292,600 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.
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