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On January 1, 2019, Marigold Corp. Had the following stockholders' equity accounts.


Common Stock ($10 par value, 84,800 shares issued and outstanding) $848,000

Paid-in Capital in Excess of Par Value-Common Stock 218,000

Retained Earnings 569,000


During the year, the following transactions occurred.


Jan. 15 Declared a $1. 12 cash dividend per share to stockholders of record on January 31, payable February 15.

Feb. 15 Paid the dividend declared in January.

Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $16 per share.

May 15 Issued the shares for the stock dividend.

July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $14. (The new par value is $5. )

Dec. 1 Declared a $0. 60 per share cash dividend to stockholders of record on December 15, payable January 10, 2020.

Dec. 31 Determined that net income for the year was $220,000.


Required:

a. Prepare the stockholdersâ equity section of the balance sheet at December 31.

b. Calculate the payout ratio and return on common stockholdersâ equity

Sagot :

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a. The preparation of the stockholders' equity section of the balance sheet at December 31 foro Marigold Corp. is as follows:

Stockholders' Equity Section:

Marigold Corporation

Balance Sheet

At December 31, 2019

Common Stock ($5 par value)

186,560 shares issued and outstanding                       $932,800

Paid-in Capital in Excess of Par Value-Common Stock  268,880

Retained Earnings                                                             446,408

Total equity                                                                  $1,648,088

b. The payout ratio and return on common stockholders' equity are as follows:

Payout ratio = Cash Dividends/Net Income

= 94% ($206,912/$220,000 x 100)

Return on Common Stockholders' Equity = Net Income/Beginniing Outstanding Equity

= 13.5% ($220,000/$1,635,000 x 100)

Data and Analysis:

Common Stock ($10 par value)

84,800 shares issued and outstanding                       $848,000

Paid-in Capital in Excess of Par Value-Common Stock 218,000

Retained Earnings                                                           569,000

Total equity                                                                $1,635,000

Jan. 15 Retained Earnings $94,976 (84,800 x $1.12) Cash Dividends Payable $94,976

Feb. 15 Dividends Payable $94,976 Cash $94,976

Apr. 15 Retained Earnings $135,680 Stock Dividends Payable $135,680 ($16 x 84,800 x 10%)

May 15 Stock Dividends Payable $135,680 Common Stock $84,800 Paid-in Capital in Excess of Par Value $50,880

July 1 Common Stock increased to 186,560 at $5 each (84,800 + 8,480 x 2)

Dec. 1  Retained Earnings $111,936 (186,560 x $0.60) Cash Dividends Payable $111,936
Dec. 31 Net income for the year = $220,000

Retained Earnings:

Beginning balance         $569,000

Net Income                       220,000

Dividends:

Jan. 15 Cash Dividends    (94,976)

Apr. 15 Stock Dividends (135,680)

Dec. 1  Cash Dividends    (111,936)

Ending balance             $446,408

Learn more about the stockholders' equity section at https://brainly.com/question/13373888

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