Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockholders\' equity accounts. Common Stock ($20 par value, 50,000 shares issued and outstanding) Paid-in Capital in Excess of Par-Common Stock Retained Earnings $1,000,000 190,000 550,000 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 $35 July 1 Declared a 10% stock dividend to stockholders of record on July 15 distributable uly 31 On uly 1, the market price of the stock was SA er share. 31 Dec. 1 31 Issued the shares for the stock dividend. Declared a $0.30 per share dividend to stockholders of record on December 15, payable January 5, 2018. Determined that net income for the year was $300,000 Solution a) Journal Entries Date Accounts and Titles Debit Credit Feb.1 Retained Earnings (50,000 X $1) $50,000.00 Dividends Payable $50,000.00 Mar.1 Dividends Payable $50,000.00 Cash $50,000.00 Apr.1 No Entry Two-for-one stock split increases number of shares to 100,000 = (50,000 X 2) and reduces par value to $10 per share Jul.1 Retained Earnings (100,000 x 10% x $14) $140,000.00 Common Stock Dividends Distributable (10,000 X $10) $100,000.00 Paid-in Capital in Excess of Par Value (10,000 X $4) $40,000.00 Jul.31 Common Stock Dividends Distributable $100,000.00 Common Stock $100,000.00 Dec. 1 Retained Earnings (110,000 X $.30) $33,000.00 Dividends Payable $33,000.00 Dec. 31 Income Summary $300,000.00 Retained Earnings $300,000.00 b) Geffrey Corporation Balance Sheet (Partial) December 31, 2017 Stockholders’ equity Paid- in capital Capital stock Common stock, $10 par value, 110,000 shares issued and outstanding $1,100,000.00 Additional paid-in capital In excess of par value ($190,000 + $40,000) $230,000.00 Total paid-in capital $1,330,000.00 Retained earnings ($300,000 + 33000 + 140000 + 50000) $523,000.00 Total stockholders’ equity $1,853,000.00.

1. Problem 14-1A On January 1, 2017, Geffrey Corporation had the following stockholders'
equity accounts. Common Stock ($20 par value, 50,000 shares issued and outstanding) Paid-in
Capital in Excess of Par-Common Stock Retained Earnings $1,000,000 190,000 550,000 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 $35 July 1 Declared a 10% stock dividend to stockholders of record on July 15 distributable
uly 31 On uly 1, the market price of the stock was SA er share. 31 Dec. 1 31 Issued the shares for
the stock dividend. Declared a $0.30 per share dividend to stockholders of record on December
15, payable January 5, 2018. Determined that net income for the year was $300,000
Solution
a) Journal Entries Date Accounts and Titles Debit Credit Feb.1 Retained Earnings (50,000
X $1) $50,000.00 Dividends Payable $50,000.00 Mar.1 Dividends Payable $50,000.00
Cash $50,000.00 Apr.1 No Entry Two-for-one stock split increases number of shares to
100,000 = (50,000 X 2) and reduces par value to $10 per share Jul.1 Retained Earnings
(100,000 x 10% x $14) $140,000.00 Common Stock Dividends Distributable (10,000 X $10)
$100,000.00 Paid-in Capital in Excess of Par Value (10,000 X $4) $40,000.00 Jul.31
Common Stock Dividends Distributable $100,000.00 Common Stock $100,000.00 Dec.
1 Retained Earnings (110,000 X $.30) $33,000.00 Dividends Payable $33,000.00 Dec.
31 Income Summary $300,000.00 Retained Earnings $300,000.00 b) Geffrey
Corporation Balance Sheet (Partial) December 31, 2017 Stockholders’ equity Paid-
in capital Capital stock Common stock, $10 par value, 110,000 shares issued and
outstanding $1,100,000.00 Additional paid-in capital In excess of par value ($190,000 +
$40,000) $230,000.00 Total paid-in capital $1,330,000.00 Retained earnings ($300,000 +
33000 + 140000 + 50000) $523,000.00 Total stockholders’ equity $1,853,000.00