P 18–5 Shareholders’ equity transactions; statement of shareholders’ equity ● LO6 through LO8 (see included excel file)
Listed below are the transactions that affected the shareholders’
equity of Branch-Rickie Corporation during the period 2011–2013. At
December 31, 2010, the corporation’s accounts included:
a. November 1, 2011,
the board of directors declared a cash dividend of $.80 per share on its
common shares, payable to shareholders of record November 15, to be
paid December 1.
b. On March 1, 2012,
the board of directors declared a property dividend consisting of
corporate bonds of Warner Corporation that Branch-Rickie was holding as
an investment. The bonds had a fair value of $1.6 million, but were
purchased two years previously for $1.3 million. Because they were
intended to be held to maturity, the bonds had not been previously
written up. The property dividend was payable to shareholders of record
March 13, to be distributed April 5.
c. On July 12, 2012,
the corporation declared and distributed a 5% common stock dividend
(when the market value of the common stock was $21 per share). Cash was
paid in lieu of fractional shares representing 250,000 equivalent whole
shares.
d. On November 1, 2012,
the board of directors declared a cash dividend of $.80 per share on
its common shares, payable to shareholders of record November 15, to be
paid December 1.
e. On January 15, 2013,
the board of directors declared and distributed a 3-for-2 stock split
effected in the form of a 50% stock dividend when the market value of
the common stock was $22 per share.
f. On November 1,
2013, the board of directors declared a cash dividend of $.65 per share
on its common shares, payable to shareholders of record November 15, to
be paid December 1.
Required:
1. Prepare the journal entries that Branch-Rickie recorded during the three-year period for these transactions.
2. Prepare comparative
statements of shareholders’ equity for Branch-Rickie for the three-year
period ($ in 000s). Net income was $330 million, $395 million, and $455
million for 2011, 2012, and 2013, respectively.
