Question Completion:
At the end of the year, the records of NCIS Corporation provided the following selected and incomplete data:
Common stock ($10 par value); no changes in account during the year.
Shares authorized: 200,000.
Shares issued: _____ (all shares were issued at $17 per share. Total cash collected: $2,125,000).
Treasury stock: 3,000 shares (repurchased at $20 per share).
The treasury stock was acquired after a stock split was announced.
Net income: $240,340.
Dividends declared and paid: $123,220.
Retained earnings beginning balance: $555,000.
Answer:
NCIS Corporation
Journal Entry to record the stock dividend:
Debit Retained earnings $244,000
Credit Common stock distributable $122,000
Credit Additional Paid-in Capital $122,000
To record the stock dividend declared.
Explanation:
a) Data and Calculations:
Common stock ($10 par value); no changes in account during the year.
Shares authorized: 200,000.
Shares issued: _125,000____ (all shares were issued at $17 per share. Total cash collected: $2,125,000).
= 125,000 ($2,125,000/$17)
Treasury stock: 3,000 shares (repurchased at $20 per share) $60,000
Stock outstanding before the stock dividend = 122,000 (125,000 - 3,000)
Stock dividend (10%) 12,200 (122,000 * 10%)
Common stock outstanding = 134,200 (122,000 + 12,200) shares
Net income: $240,340.
Dividends declared and paid: $123,220.
Retained earnings beginning balance: $555,000.
Transaction Analysis:
Retained earnings $244,000 (12,200 * 20%) Common stock distributable $122,000 Additional Paid-in Capital $122,000
