| Krull Corporation presented the following selected information. The company has a calendar year end. | |||
| Before considering the effects of dividends, if any, Krull’s net income for 20X7 was $2,500,000. | |||
| Before considering the effects of dividends, if any, Krull’s net income for 20X8 was $3,000,000. | |||
| Krull declared $750,000 of dividends on November 15, 20X7. The date of record was January 15, 20X8. The dividends were paid on February 1, 20X8. | |||
| Stockholders’ equity, at January 1, 20X7, was $5,000,000. No transactions impacted stockholders’ equity throughout 20X7 and 20X8, other than the impact of earnings and dividends on retained earnings. | |||
| (a) | Prepare journal entries, if needed, to reflect the dividend declaration, the date of record, and the date of payment. | ||
| (b) | How much was net income for 20X7 and 20X8? | ||
| (c) | How much was total equity at the end of 20X7 and 20X8? | ||
| (d) | Is total “working capital” reduced on the date of declaration, date of record, and/or date of payment? | ||
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