On January 1, 20-1, Grant Company's retained earnings account had the following balances:
During the year ended December 31, 20-1, Grant completed the following selected transactions:
|Apr. 15||Estimated that its 20-1 income tax will be $40,000. Based on this estimate, it will make four quarterly payments of $10,000 each on April 15, June 15, September 15, and December 15.|
|20||Declared semiannual dividend of $0.30 per share on common stock to shareholders of record on May 5, payable May 15. Currently, 50,000 shares of $3 par stock are outstanding.|
|May 15||Paid the cash dividend.|
|June 15||Made estimated tax payment of $10,000.|
|Sept. 15||Made estimated tax payment of $10,000.|
|Oct. 20||Declared a semiannual dividend of $0.30 per share on common stock to shareholders of record on November 5, payable on November 15.|
|Nov. 15||Paid the cash dividend.|
|16||Declared a 10% stock dividend to shareholders of record on December 2, distributable on December 10. Market value of the common stock was estimated at $7 per share.|
|Dec. 10||Issued certificates for common stock dividend.|
|15||Made estimated tax payment of $10,000. On December 31, the following adjusting and closing entries were made:|
|31||Grant's actual 20-1 income tax is $44,000. The $4,000 ($44,000-$40,000) additional amount owed will be paid by March 15, 20-2. Made adjustment for the additional amount owed.|
|31||Net income for 20-1 was $98,000. Closed the income summary account.|
|31||Closed the cash dividends and stock dividends accounts.|
Prepare journal entries for the above transactions and for the adjusting and closing process.
We've got a step-by-step solution to this question!
Review the steps by clicking the button below.