Question

1. Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life’s balance sheet: Common stock (310,000 shares authorized ; 6,000 shares issued), $25 par, $150,000; Paid-In Capital in excess of par— common stock, $30,000; and Retained earnings, $1,650,000. The board of directors declared a 2% stock dividend when the market price of the stock was $32 a share. Healthy Life reported no income or loss for the current year.

   If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown.

   a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

   a2. Journalize the entry to record the issuance of the stock certificates.

   b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

   Total paid-in capital	$
   Total retained earnings	$
   Total stockholders' equity	$

   c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

   Total paid-in capital	$
   Total retained earnings	$
   Total stockholders' equity	$

Healthy Life Co. is an HMO for businesses in the Fresno area. The following account balances appear on Healthy Life’s balance sheet: Common stock (310,000 shares authorized ; 6,000 shares issued), $25 par, $150,000; Paid-In Capital in excess of par— common stock, $30,000; and Retained earnings, $1,650,000. The board of directors declared a 2% stock dividend when the market price of the stock was $32 a share. Healthy Life reported no income or loss for the current year.

If an amount box does not require an entry, leave it blank. If no entry is required, select "No entry required" from the dropdown.

a1. Journalize the entry to record the declaration of the dividend, capitalizing an amount equal to market value.

a2. Journalize the entry to record the issuance of the stock certificates.

b. Determine the following amounts before the stock dividend was declared: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital	$
Total retained earnings	$
Total stockholders' equity	$

c. Determine the following amounts after the stock dividend was declared and closing entries were recorded at the end of the year: (1) total paid-in capital, (2) total retained earnings, and (3) total stockholders' equity.

Total paid-in capital	$
Total retained earnings	$
Total stockholders' equity	$

Answer 1

a1
Stock Dividends	3840		=6000*2%*32
Stock Dividends Distributable		3000	=6000*2%*25
Paid in Capital in excess of par-Common Stock		840
a2
Stock Dividends Distributable	3000
Common Stock		3000
b
Total paid in Capital	180000		=150000+30000
Total Retained Earnings	1650000
Total Stockholders' Equity	1830000
c
Total paid in Capital	183840		=180000+3840
Total Retained Earnings	1646160		=1650000-3840
Total Stockholders' Equity	1830000