| Listed below are the transactions that affected the shareholders’ equity of Branch-Rickie Corporation during the period 2016–2018. At December 31, 2015, the corporation’s accounts included: |
| ($ in 000s) | ||
| Common stock, 105 million shares at $1 par | $ | 105,000 |
| Paid-in capital—excess of par | 630,000 | |
| Retained earnings | 970,000 | |
| a. | November 1, 2016, 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, 2017, 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, 2017, 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, 2017, 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, 2018, 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, 2018, 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. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Enter your answ |
| a | Particular | Debit | credit |
| November-1- 2016 | Retained earnings (105,000,000 x $0.80) | 84,000,000 | |
| to Dividend payable | 84,000,000 | ||
| Noemnber 15-2016 | No entry | ||
| December -1-2016 | Dividend payable | 84,000,000 | |
| To cash | 84,000,000 |
2017
| b | Particular | Debit | Credit |
| 3/1 | Investment in Warner Bonds (1.6 – 1.3) | 300,000 | |
| Gain on appreciation of investments | 300,000 | ||
| Retained earnings | 1,600,000 | ||
| Property dividend payable | 1,600,000 | ||
| 3/13 | No entry | ||
| 4/5 | Property dividend payable | 1,600,000 | |
| Investment in Warner Bonds | 1,600,000 |
July 2017
| C | Particular | Debit | Credit |
| Retained earnings (5,250,000 x $21) | 110,250,000 | ||
| Common stock (5,000,000 x $1) | 5,000,000 | ||
| Paid-in capital-excess of par (5,000,000 x $20) | 100,000,000 | ||
| Cash (250,000 x $21) | 5,250,000 |
November 2017
| D | Particular | Debit | Credit |
| 11/1 | Retained earnings | 88,000,000 | |
| Dividend payable | 88,000,000 | ||
| 11/15 | No entry | ||
| 12/1 | Dividend payable | 88,000,000 | |
| Cash | 88,000,000 |
January 2018
| e | Particular | Debit | Credit |
| Retained earnings (55,000,000 x $1) | 55,000,000 | ||
| Common stock (55,000,000 x $1) | 55,000,000 |
November 2018
| f | Particular | Debit | Credit |
| 11/1 | Retained earnings | 107,250,000 | |
| Dividend payable | 107,250,000 | ||
| 11/15 | No entry | ||
| 12/1 | Dividend payable | 107,250,000 | |
| Cash | 107,250,000 |
On November 1, the corporation had 165,000,000 shares outstanding (105,000,000 + 5,000,000 + 55,000,000). The amount of the dividend is $107,250,000 ($0.65 x 165,000,000)
