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    Assignment 2 Solution

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    arwa
    The document summarizes two questions related to retained earnings and dividends. Question 1 provides details of transactions for Wando Company in 2020 including a prior period adjustment, cash dividend, stock dividend, and net loss. It then shows the calculation of the 2020 retained earnings statement. Question 2 provides journal entries to record share issuances, cash dividends, a share split, and stock dividend for Triad Corporation.

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    Assignment 2 Solution

    Uploaded by

    arwa
    189 views3 pages
    The document summarizes two questions related to retained earnings and dividends. Question 1 provides details of transactions for Wando Company in 2020 including a prior period adjustment, cash dividend, stock dividend, and net loss. It then shows the calculation of the 2020 retained earnings statement. Question 2 provides journal entries to record share issuances, cash dividends, a share split, and stock dividend for Triad Corporation.

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    Accounting II

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    The document summarizes two questions related to retained earnings and dividends. Question 1 provides details of transactions for Wando Company in 2020 including a prior period adjustment, cash dividend, stock dividend, and net loss. It then shows the calculation of the 2020 retained earnings statement. Question 2 provides journal entries to record share issuances, cash dividends, a share split, and stock dividend for Triad Corporation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    189 views3 pages

    Assignment 2 Solution

    Uploaded by

    arwa
    The document summarizes two questions related to retained earnings and dividends. Question 1 provides details of transactions for Wando Company in 2020 including a prior period adjustment, cash dividend, stock dividend, and net loss. It then shows the calculation of the 2020 retained earnings statement. Question 2 provides journal entries to record share issuances, cash dividends, a share split, and stock dividend for Triad Corporation.

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    © All Rights Reserved
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    of 3

    CHAPTER 14: DIVIDENDS, RETAINED EARNINGS AND INCOME REPORTING

    QUESTION 1

    Wando Company reported retained earnings at December 31, 2019, of $410,000. Wando had
    160,000 shares of common stock outstanding throughout 2020. The following transactions
    occurred during 2020.
    1. An error was discovered in the 2018 accounting records, depreciation expense was recorded
    at $65,000, but the correct amount was $50,000.
    2. A cash dividend of $0.50 per share was declared and paid.
    3. A 15% stock dividend was declared and distributed when the market price per share was $8
    per share.
    4. Net loss was $80,000.

    Instructions:
    Prepare a retained earnings statement for 2020.

    Balance 410,000
    +
    Correction for 15,000
    understaded
    --------------
    Adjusted balance 425,000
    (-) net loss (80,000)
    -----------------
    345,000
    (-) Dividined (272,000) ---> cash dividend 160,000*0.50=80,000
    stock dividend 160,000*15%*8=192,000
    (80,000+192,000)=272,000
    -----------------
    73,000

    QUESTION 2
    On January 1, 2019, Triad Corporation had 60,000 shares of $2.50 par value common stock
    issued and outstanding. During the year, the following transactions occurred:
    Mar. 1 Issued 25,000 shares of common stock for $300,000.
    June 1 Declared a cash dividend of $2.00 per share to stockholders of record on June 15.
    June 30 Paid the $2.00 cash dividend.
    Aug 1 Announced a 2-for-1 share split.
    Nov 15 Declared 10% stock dividend on outstanding shares to stockholders of record on
    November 30. The market price is $12.
    Dec 15 Issued the share for the share dividend.

    Instructions:

    Prepare journal entries to record the above transactions.

    Mar 1 cash ................................................ 300,000


    share captial -ordinary ........................... 62,500
    share premium-ordinary ......................... 237,500

    June 1 cash dividend ...................................170,000


    dividend payable .................................. 170,000
    (60,000*25,000)x2

    June 30 cash dividend ...................................170,000


    cash .................................................. 170,000

    Aug 1 Memo 2 for 1 share split increases number of share to (85,000x2)=170,000 share and
    reduces par value to 1.25= (2.50\2)

    Nov 15 share dividend .................................... 204,000


    (170,000*10%*12)
    ordinary share dividends ....................... 21,250
    distributable (170,000*10%*1.25)
    share premium- ordinary ........................ 182,750

    Dec 15 ordinary share dividends ....................... 21,250


    distributable
    share capital -ordinary .......................... 21,250

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