On January 1, 2014, Prasad Corporation had the following stockholders’ equity accounts.
Common Stock ($25 par value, 48,000 shares issued
and outstanding) ………………$1,200,000
Paid-in Capital in Excess of Par—Common Stock ….. 200,000
Retained Earnings ……………….. . 600,000
During the year, the following transactions occurred.
Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable March 1.
Mar. 1 Paid the dividend declared in February.
Apr. 1 Announced a 5-for-1 stock split. Prior to the split, the market price per share was $36.
July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable
July 31. On July 1, the market price of the stock was $7 per share.
31 Issued the shares for the stock dividend.
Dec. 1 Declared a $0.40 per share dividend to stockholders of record on December 15, payable January 5, 2015.
31 Determined that net income for the year was $350,000.
(a) Journalize the transactions and the closing entries for net income and dividends.
(b) Enter the beginning balances, and post the entries to the stockholders’ equity accounts.
(c) Prepare a stockholders’ equity section at December 31.