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Question

Holiday Travel Corporation's shareholders' equity section at December 31, 2016

appears below:

      Shareholders' equity

             Common shares, no par value, 50,000 shares issued.................................... $600,000

             Retained earnings............................................................................................  150,000

     Total shareholders' equity........................................................................................ $750,000

 

On June 30, 2017, the board of directors of Holiday Travel Corporation declared a 10% stock dividend, payable on July 31, 2017, to shareholders of record on July 15, 2017. The fair market value of Holiday Travel Corporation's shares on June 30, 2017, was $12 per share.

 

On December 1, 2017, the board of directors declared a 2-for-1 stock split effective December 15, 2017. Holiday Travel Corporation's shares were selling for $16 on December 1, 2017, before the stock split was declared. Profit for 2017 was $225,000 and there were no cash dividends declared.

 

 

 

Instructions

a)   Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split.

b)   Fill in the amount that would appear in the shareholders' equity section for Holiday Travel Corporation at December 31, 2017, for the following items:

      1.   Common shares                                                $____________

      2.   Number of shares issued                                   $____________

      3.   Retained earnings                                             $____________

      4.   Total shareholders' equity                                 $____________

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