Transactions affecting retained earnings

E 18-23 Transactions affecting retained earnings
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31, 2010:
During 2011, 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
240,000 shares of Leasco International common stock that Consolidated
Paper had purchased in January as an investment (book value: $700,000).
The investment shares had a fair value of $3 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 2% 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 8.8% cash dividend
on the 90,000 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 $.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., for the year ended at December 31, 2011. Net
income for the year was $810,000.

 

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