On January 1, 2019, Metlock, Inc. had the following stockholders' equity accounts. Common Stock ($10 par value, 82,100 shares issued and outstanding) $821,000 Paid-in Capital in Excess of Par Value-Common Stock 206,000 Retained Earnings 566,000 During the year, the following transactions occurred. Jan. 15 Declared a $1.12 cash dividend per share to stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $16 per share. May 15 Issued the shares for the stock dividend. July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $13. (The new par value is $5.) Dec. 1 Declared a $0.60 per share cash dividend to stockholders of record on December 15, payable January 10, 2020. Dec. 31 Determined that net income for the year was $290,000.
Journalize the transactions and the closing entries for net income and dividends. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when the 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.)

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Answer and Explanation:

The journal entries are shown below:

a. On Jan 15

Cash Dividend  $91,952    (82,100 shares × $1.12)

       To Dividend payable $91,952

(Being the dividend is declared is recorded)

b. On Feb 15

Dividend payable $91,952

      To cash $91,952

(Being the dividend is paid)

c. On April 15

Stock Dividend $131,360  (82,100 shares × $16)

          To Common stock dividend distributable  $82,100 (82,100 shares × $10 × 10%)

          To Paid in capital in excess of par - common stock $49,260

(Being the declaration of the stock dividend is recorded)

d. On May 15

Common stock dividend distributable $82,100 (82,100 shares × $10 × 10%)

            To Common stock $82,100

(Being the issue of the shares for the stock dividend is recorded)

e. On July 1

No journal entry is required

f. On Dec 1

Cash Dividend  $108,372    (180,620 shares × $0.60)

       To Dividend payable $108,372

(Being the dividend is declared is recorded)

The 180,620 shares are come from

= (82,100 + 8,210) × 2

= $180,620

g. On Dec 31

Retained earnings $200,324   ($108,372 + $91,952)

      To Dividend payable  $200,324

(Being the cash dividend is closed)

h. On Dec 31

Retained earnings $131,360 (82,100 shares × $16)

      To Stock dividend $131,360

(Being the stock  dividend is closed)

i. On Dec 31

Income summary Dr $290,000

   To Retained earning $290,000

(Being the net income is closed)

Only these journal entries are required

The journal entries are the initial step of the accounting system. They are defined as the book keeping system recording each business transactions in the books of accounts for the future use and recording purpose.

The journal entries gives dual effect of each business transaction. This balances the books of accounts.

The journal entries for the given transactions are recorded in the image attached below.

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