Before preparing financial statements for the current year, the chief accountant for Pharoah Ltd. provided the following information regarding the accounting for dividends and stock splits: 1. Pharoah has 21,200, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and recorded it as a debit to Dividends Expense and a credit to Cash. 2. A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet. 3. The company declared a 2-for-1 stock split on its 21,200, $4 noncumulative preferred shares. The average per share amount of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,484,000 and a credit to Preferred Shares of $1,484,000. Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (1) Dec. 31 enter an account title to record payment of cash dividend on December 31 enter a debit amount enter a credit amount enter an account title to record payment of cash dividend on December 31 enter a debit amount enter a credit amount (To record payment of cash dividend.) (2) Dec. 31 enter an account title to record declaration of stock dividend on December 31 enter a debit amount enter a credit amount enter an account title to record declaration of stock dividend on December 31 enter a debit amount enter a credit amount (To record declaration of stock dividend.) (3) Dec. 31 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount
Before preparing financial statements for the current year, the chief accountant for Pharoah Ltd. provided the following information regarding the accounting for dividends and stock splits: 1. Pharoah has 21,200, $4 noncumulative preferred shares issued. It paid the preferred shareholders the quarterly dividend, and recorded it as a debit to Dividends Expense and a credit to Cash. 2. A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, Retained Earnings was debited and Dividends Payable was credited. The shares have not been issued yet. 3. The company declared a 2-for-1 stock split on its 21,200, $4 noncumulative preferred shares. The average per share amount of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,484,000 and a credit to Preferred Shares of $1,484,000. Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (1) Dec. 31 enter an account title to record payment of cash dividend on December 31 enter a debit amount enter a credit amount enter an account title to record payment of cash dividend on December 31 enter a debit amount enter a credit amount (To record payment of cash dividend.) (2) Dec. 31 enter an account title to record declaration of stock dividend on December 31 enter a debit amount enter a credit amount enter an account title to record declaration of stock dividend on December 31 enter a debit amount enter a credit amount (To record declaration of stock dividend.) (3) Dec. 31 enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount enter an account title for the journal entry on December 31 enter a debit amount enter a credit amount
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...
Related questions
Question
Before preparing financial statements for the current year, the chief accountant for Pharoah Ltd. provided the following information regarding the accounting for dividends and stock splits:
1. | Pharoah has 21,200, $4 noncumulative |
|
2. | A 5% stock dividend (1,000 shares) was declared on the common shares when the fair value per share was $12. To record the declaration, |
|
3. | The company declared a 2-for-1 stock split on its 21,200, $4 noncumulative preferred shares. The average per share amount of the preferred shares before the split was $70. The split was recorded as a debit to Retained Earnings of $1,484,000 and a credit to Preferred Shares of $1,484,000. |
Determine if each of the above transactions was recorded correctly and, if not, prepare the correct entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
---|---|---|---|
(1) Dec. 31
|
enter an account title to record payment of cash dividend on December 31
|
enter a debit amount
|
enter a credit amount
|
enter an account title to record payment of cash dividend on December 31
|
enter a debit amount
|
enter a credit amount
|
|
(To record payment of cash dividend.) | |||
(2) Dec. 31
|
enter an account title to record declaration of stock dividend on December 31
|
enter a debit amount
|
enter a credit amount
|
enter an account title to record declaration of stock dividend on December 31
|
enter a debit amount
|
enter a credit amount
|
|
(To record declaration of stock dividend.) |
|||
(3) Dec. 31
|
enter an account title for the
|
enter a debit amount
|
enter a credit amount
|
enter an account title for the journal entry on December 31
|
enter a debit amount
|
enter a credit amount
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning