Question

1. Hope Company has common stock ($8 par value, 220,000 shares issued and outstanding) $1,760,000 on 2020 During the year, the following transactions occurred.

March 1           Declared a $2.00 cash dividend per share to stockholders. Record on March 14.

May 1              Paid the dividend declared in March.

May 20            Announced a 2-for-1 stock split. Prior to the split, the market price per share was$20.

Aug 1               Declared a 10% stock dividend to stockholders, record on August 15, distributable August 31. On August 1, the market price of the stock was $8 per share.

Aug 31             Issued the shares for the stock dividend.

Dec 1               Declared a $2.20 per share dividend to stockholders. Record on December 15.

Dec 31             Determined that net income for the year was $1,200,000.

Instructions

Journalize the transactions and the closing entries for net income, stock dividends, and cash dividends.

Answer 1

Date	Journal entry	Dr. ($)	Cr. ($)
01/03/20	retained earnings	440000
	To dividends payable		440000
	(declaration of dividend)
01/05/20	dividends payable	440000
	To cash		440000
	(dividends paid)
20/05/20	no entry stock split 2-for-1, shares outstanding 440000 @ $4 par value
01/08/20	retained earnings (440000*10%*8)	352000
	To stock dividend distributable		176000
	To paid-in capital in excess of par – common stock (440000*10%*4)		176000
	(10% stock dividend)
31/08/20	stock dividend distributable	176000
	To common stock		176000
	(issued common stock for stock dividend)
01/12/20	retained earnings (440000*$2.20)	968000
	To dividends payable		968000
	(dividend declared)
31/12/20	income summary	1200000
	To retained earnings		1200000
	(transferred net income to retained earnings)