Accounting Principles: P14-2A The stockholders’ equity accounts of Karp Company

Accounting Principles P14-2A The stockholders’ equity accounts of Karp Company at January 1, 2014, are as follows. Preferred Stock, 6%, $50 par 600,000 Common Stock, $5 par 800,000 Paid-in Capital in Excess of Par—Preferred Stock 200,000 Paid-in Capital in Excess of Par—Common Stock 300,000 Retained Earnings 800,000 There were no dividends in arrears on preferred stock. During 2014, the company had the following transactions and events. 1-Jul Declared a $0.60 cash dividend per share on common stock. 1-Aug Discovered $25,000 understatement of 2013 depreciation on equipment. (Ignore income taxes.) 1-Sep Paid the cash dividend declared on July 1. 1-Dec Declared a 15% stock dividend on common stock when the market price of the stock was $18 per share. 15-Dec Declared a 6% cash dividend on preferred stock payable January 15, 2015. 31-Dec Determined that net income for the year was $355,000. 31-Dec Recognized a $200,000 restriction of retained earnings for plant expansion. Instructions: a. Journalize the transactions, events, and closing entries for net income and dividends. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) b. Enter the beginning balances in the accounts, and post to the stockholders' equity accounts. (Note: Open additional stockholders' equity accounts as needed.) c. Prepare a retained earnings statement for the year. d. Prepare a stockholders' equity section at December 31, 2014.
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