Before preparing financial statements for the current year, the chief accountant for Toso Company discovered the following errors in the accounts.
- The declaration and payment of $50,000 cash dividend was recorded as a debit to interest Expense $50,000 and a credit to Cash $50,000.
- A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market price per share was $18. The only entry made was Stock Dividends (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
- A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to common stock $2,000,000.
Instructions
Prepare the correcting entries at December 31.
Solution
