On January 1, 2010, Carolinas Corporation had the following stockholders' equity accounts

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.1Retained Earnings (60,000 X $1)

60,000

Dividends Payable

60,000

Mar.1Dividends Payable

60,000

Cash

60,000

Apr.1Memotwo-for-one stock split

increases number of shares to

120,000 = (60,000 X 2) and reduces

par value to $10 per share.

July1Retained 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

31Common Stock Dividends

Distributable

120,000

Common Stock

120,000

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

66,000

Dividends Payable

66,000

31Income Summary

350,000

Retained Earnings

350,000

(b)

Common Stock

DateExplanationRef.DebitCreditBalance

Jan.1

Apr.1

July31Balance

2 for 1 splitnew

par $10120,0001,200,000

1,320,000

Common Stock Dividends Distributable

DateExplanationRef.DebitCreditBalance

July1

31120,000120,000120,000

0

Paid-in Capital in Excess of Par Value

DateExplanationRef.DebitCreditBalance

Jan.1

July1Balance36,000200,000

236,000

Retained Earnings

DateExplanationRef.DebitCreditBalance

Jan.1

Feb.1

July1

Dec.1

31Balance

Cash dividend

Stock dividend

Cash dividend

Net income60,000

156,000

66,000350,000600,000

540,000

384,000

318,000

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