Altuve Co. was incorporated on January 1, 2013, at which time 250,000 shares of $10 par value common stock were authorized, and 110,000 of these shares were issued for $17 per share. Net income for the year ended December 31, 2013, was $1,257,300. Altuve Co.’s board of directors declared dividends of $3 per share of common stock on December 31, 2013, payable on February 7, 2014.Use the horizontal model to show the effects of the following:a. The issuance of common stock on January 1, 2013b. The declaration of dividends on December 31, 2013.c. The payment of dividends on February 7, 2014.

Altuve Co.

Horizontal Model and Transaction Effects:

Balance Sheet                                            

a. The issuance of common stock on January 1, 2013

Assets                    = Liabilities     +     Equity

Cash $1,870,000   =                            Common Stock $1,100,000

                                                            Additional Paid-in  770,000

b. The declaration of dividends on December 31, 2013.

Assets                    = Liabilities            +         Equity

Assets                    = Liabilities $330,000 +  Equity ($330,000)

c. The payment of dividends on February 7, 2014.

Assets ($330,000) = Liabilities ($330,000)  + Equity

Explanation:

a) Data and Analysis:

a. The issuance of common stock on January 1, 2013

Jan. 1, 2013: Cash $1,870,000 Common Stock $1,100,000 Additional Paid-in Capital $770,000

b. The declaration of dividends on December 31, 2013.

Dec. 31, 2013: Cash Dividend $330,000 Dividends Payable $330,000

c. The payment of dividends on February 7, 2014.

Feb. 7, 2014: Dividends Payable $330,000 Cash $330,000

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