Answer: Please see below for answers
Explanation:
Current assets $541,000
Debt investments 655,000
Common stock (par value $10) 660,000
Paid-in capital in excess of par 153,500
Retained earnings 869,000
calculations
a) A 5% stock dividend is (1) declared and (2) distributed at a time when the market price per share is $32.
Common stock (par value $10) 660,000
Retained earning = 660,000 x 5% x $32 = $1,056,000
common stock dividend distributed =660,000 x 5%x $10= $330,000
c) Debt Investment from bond with book value $94,020 and $126,720 fair value = $126,720 -- $94,020 = $32,700
Journal entries
a) Account Particulars Debit Credit
Retained earning $1,056,000
common stock dividend distributable $330,000
Paid-in Capital in Excess of Par
( $1,056,000-$330,000) $726,000
Common stock dividend distributable $330,000
common stock $330,000
b.No entry instead for the stock split 0f 5 to 1, a memo entry to record that the number of shares and par value per share has changed is created.
journal to record dividend declared January 5, 2014, January 5, 2014,
c) Investment Bonds $32,700
Gain on appreciation of Investments (Bonds) $32,700
Retained Earnings $126,720.
Property Dividends Payable $126,720.
Journal to record dividend paid January 25, 2014,
Property Dividends Payable $126,720.
investment bonds $126,720