FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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M2

The balance sheet of Consolidated Paper, Inc., included the following
shareholders' equity accounts at December 31, 2020:
Paid-in capital:
Preferred stock, 7.5%, 98,000 shares at $1 pars
Common stock, 484,800 shares at $1 par
Paid-in capital-excess of par, preferred
Paid-in capital-excess of par, common
Retained earnings.
Treasury stock, at cost; 4,800 common shares.
Total shareholders' equity
98,000
484,800
1,595,000
2,645,000
9,745,000
(52,800)
$14,515,000
During 2021, several events and transactions affected the retained earnings
of Consolidated Paper.
Required:
1. Prepare the appropriate entries for these events.
a. On March 3, the board of directors declared a property dividend of
290,000 shares of Leasco International common stock that
Consolidated Paper had purchased in January as an investment (book
value: $552,000). The investment shares had a fair value of $2 per
share and were distributed March 31 to shareholders of record March
15.
b. On May 3, a 5-for-4 stock split was declared and distributed. The stock
split was effected in the form of a 25% stock dividend. The market value
of the $1 par common stock was $11 per share.
c. On July 5, a 1% common stock dividend was declared and distributed.
The market value of the common stock was $11 per share.
d. On December 1, the board of directors declared the 7.5% cash dividend
on the 98,000 preferred shares, payable on December 28 to
shareholders of record December 20.
e. On December 1, the board of directors declared a cash dividend of
$0.50 per share on its common shares, payable on December 28 to
shareholders of record December 20
2. Prepare the shareholders' equity section of the balance sheet for
Consolidated Paper, Inc., at December 31, 2021. Net income for the year was
$880,000.
I
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Transcribed Image Text:The balance sheet of Consolidated Paper, Inc., included the following shareholders' equity accounts at December 31, 2020: Paid-in capital: Preferred stock, 7.5%, 98,000 shares at $1 pars Common stock, 484,800 shares at $1 par Paid-in capital-excess of par, preferred Paid-in capital-excess of par, common Retained earnings. Treasury stock, at cost; 4,800 common shares. Total shareholders' equity 98,000 484,800 1,595,000 2,645,000 9,745,000 (52,800) $14,515,000 During 2021, several events and transactions affected the retained earnings of Consolidated Paper. Required: 1. Prepare the appropriate entries for these events. a. On March 3, the board of directors declared a property dividend of 290,000 shares of Leasco International common stock that Consolidated Paper had purchased in January as an investment (book value: $552,000). The investment shares had a fair value of $2 per share and were distributed March 31 to shareholders of record March 15. b. On May 3, a 5-for-4 stock split was declared and distributed. The stock split was effected in the form of a 25% stock dividend. The market value of the $1 par common stock was $11 per share. c. On July 5, a 1% common stock dividend was declared and distributed. The market value of the common stock was $11 per share. d. On December 1, the board of directors declared the 7.5% cash dividend on the 98,000 preferred shares, payable on December 28 to shareholders of record December 20. e. On December 1, the board of directors declared a cash dividend of $0.50 per share on its common shares, payable on December 28 to shareholders of record December 20 2. Prepare the shareholders' equity section of the balance sheet for Consolidated Paper, Inc., at December 31, 2021. Net income for the year was $880,000. I
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