Question

5. On January 1, 2016, TripAdvisor Corporation had 25,000 shares of $5 par value common stock issued and outstanding. During the year, the following transactions occurred:    

    

     June 1 Declared a cash dividend of $.35 per share to stockholders

              of record on June 15.

     June 30 Paid the cash dividend.

     July 1 Announced a 3-for-1 stock split to be distributed on August 1.

     Oct. 1 Declared a cash dividend of $.15 per share.

     Dec. 31 Recorded a net income of $475,000 for the year.

           

    

    

     INSTRUCTIONS

     Prepare journal entries if necessary to record the above transactions.

Answer 1

the following are the journal entries:

date	accounts	debit	credit
june 1	Retained earnings a/c	$8,750
	.............To Dividends payable a/c		8,750
	(amount = $0.35 per share *25,000 shares =>$8,750)
june 30	Dividends payable a/c	8,750
	..................To Cash a/c		8,750
july 1	no journal entry is required for stock split
	(but par value is reduced to $5/3=>$1.67, and number of shares will now be 25,000*3 =>75,000 shares)
oct 1	Retained earnings a/c	$11,250
	.............To Dividends payable a/c		11,250
	(amount = 75,000 share after stock split * $0.15 per share)
dec 31	Income summary	$475,000
	..............To Retained earnings		475,000
	(to record net income to retained earnings)