On January 1, 2010, Carolinas Corporation had the following

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On January 1, 2010, Carolinas Corporation had the following Powered By Docstoc
					On January 1, 2010, Carolinas Corporation had the following stockholders' equity accounts. Common Stock ($20 par value, 60,000
shares issued and outstanding) $1,200,000 Paid-in Capital in Excess of Par Value 200,000 Retained Earnings 600,000 During the year,
the following transactions occurred. Feb. 1 Declared a $1 cash dividend per share to stockholders of record on February 15, payable
March 1. Mar. 1 Paid the dividend declared in February. Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per
share was $36. July 1 Declared a 10% stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market
price of the stock was $13 per share. 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.50 per share dividend to
stockholders of record on December 15, payable January 5, 2011. 31 Determined that net income for the year was $350,000. Hint:
Prepare dividend entries and stockholders' equity section. (SO 1, 3) Instructions (a) Journalize the transactions and the closing entry
for net income. (b) Enter the beginning balances, and post the entries to the stockholders' equity accounts. (Note: Open additional
stockholders' equity accounts as needed.) (c) Prepare a stockholders' equity section at December 31.




(a)   Feb.     1     Retained Earnings (60,000 X $1) .............................                   60,000
                          Dividends Payable ...........................................                        60,000

      Mar.     1     Dividends Payable .....................................................         60,000
                          Cash ..................................................................              60,000

      Apr.     1     Memo—two-for-one stock split
                      increases number of shares to
                      120,000 = (60,000 X 2) and reduces
                      par value to $10 per share.

      July     1     Retained Earnings (12,000 X $13) ...........................                   156,000
                          Common Stock Dividends
                            Distributable (12,000 X $10) ......................                               120,000
                          Paid-in Capital in Excess of
                               Par Value (12,000 X $3) ..............................                           36,000

              31   Common Stock Dividends
                     Distributable ..........................................................       120,000
                        Common Stock ................................................                          120,000

       Dec.    1   Retained Earnings (132,000 X $.50) ........................                       66,000
                        Dividends Payable ...........................................                           66,000

              31   Income Summary ......................................................            350,000
                        Retained Earnings...........................................                           350,000

(b)

Common Stock
Date          Explanation                                  Ref.            Debit                Credit         Balance
Jan.      1   Balance                                                                                         1,200,000
Apr.      1   2 for 1 split—new
                 par $10
July     31                                                                                     120,000       1,320,000

Common Stock Dividends Distributable
Date          Explanation                                Ref.              Debit                 Credit        Balance
July      1                                                                                     120,000        120,000
         31                                                              120,000                                     0
Paid-in Capital in Excess of Par Value
Date            Explanation                           Ref.           Debit            Credit       Balance
Jan.       1    Balance                                                                            200,000
July       1                                                                            36,000     236,000



Retained Earnings
Date            Explanation                           Ref.           Debit            Credit       Balance
Jan.       1    Balance                                                                            600,000
Feb.       1    Cash dividend                                       60,000                         540,000
July       1    Stock dividend                                     156,000                         384,000
Dec.       1    Cash dividend                                       66,000                         318,000
          31    Net income                                                           350,000       668,000



(c)                                       CAROLINAS CORPORATION
                                             Balance Sheet (Partial)
                                              December 31, 2010

       Stockholders’ equity
            Paid-in capital
                  Capital stock
                        Common stock, $10 par value, 132,000
                          shares issued and outstanding ......................................   $1,320,000
                  Additional paid-in capital
           In excess of par value .........................................................               236,000
                 Total paid-in capital.................................................                 1,556,000
Retained earnings...................................................................................      668,000
                 Total stockholders’ equity .......................................                    $2,224,000

				
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