Question

Entries for Selected Corporate Transactions

Nav-Go Enterprises Inc. produces aeronautical navigation equipment. Nav-Go Enterprises' stockholders’ equity accounts, with balances on January 1, 20Y1, are as follows:

Common Stock, $10 stated value (800,000 shares authorized, 520,000 shares issued)	$5,200,000
Paid-In Capital in Excess of Stated Value-Common Stock	1,000,000
Retained Earnings	11,800,000
Treasury Stock (52,000 shares, at cost)	728,000

The following selected transactions occurred during the year:

Jan. 15.	Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $60,840.
Mar. 15.	Sold all of the treasury stock for $17 per share.
Apr. 13.	Issued 100,000 shares of common stock for $1,600,000.
June 14.	Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
July 16.	Issued shares of stock for the stock dividend declared on June 14.
Oct. 30.	Purchased 33,000 shares of treasury stock for $19 per share.
Dec. 30.	Declared a $0.16-per-share dividend on common stock.
31.	Closed the two dividends accounts to Retained Earnings.

Required:

1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. If required, round to one decimal place.

Common Stock
		Jan. 1 Bal.	5,200,000
		Apr. 13
		July 16
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.	1,000,000
		Apr. 13
		June 14
		Dec. 31 Bal.

Retained Earnings
Dec. 31		Jan. 1 Bal.	11,800,000
		Dec. 31
		Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.	728,000	Mar. 15
Oct. 30
Dec. 31 Bal.

Paid-In Capital from Sale of Treasury Stock
		Mar. 15

Stock Dividends Distributable
July 16		June 14

Stock Dividends
June 14		Dec. 31

Cash Dividends
Dec. 30		Dec. 31

2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.

Jan. 15. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $60,840.

Date	Account	Debit	Credit
Jan. 15	Cash Dividends Payable
	Cash

Mar. 15. Sold all of the treasury stock for $17 per share.

Date	Account	Debit	Credit
Mar. 15	Cash
	Treasury Stock
	Paid-In Capital from Sale of Treasury Stock

Apr. 13. Issued 100,000 shares of common stock for $1,600,000

Date	Account	Debit	Credit
Apr. 13	Cash
	Common Stock
	Paid-In Capital in Excess of Stated Value-Common Stock

June 14. Declared a 4% on common stock, to be capitalized at the market price of the stock, which is $18 per share.

Date	Account	Debit	Credit
June 14	Stock Dividends
	Stock Dividends Distributable
	Paid-In Capital in Excess of Stated Value-Common Stock

July 16. Issued stock for stock dividend declared on June 14.

Date	Account	Debit	Credit
July 16	Stock Dividends Distributable
	Common Stock

Oct. 30. Purchased 33,000 shares of treasury stock for $19 per share.

Date	Account	Debit	Credit
Oct. 30	Treasury Stock
	Cash

Dec. 30. Declared a $0.16-per-share dividend on common stock.

Date	Account	Debit	Credit
Dec. 30	Cash Dividends
	Cash Dividends Payable

Dec. 31. Closed the two dividends accounts to Retained Earnings.

Date	Account	Debit	Credit
Dec. 31	Retained Earnings
	Stock Dividends
	Cash Dividends

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $12,272,000 for the year ended December 31, 20Y1. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If an amount box does not require an entry, leave it blank or enter “0”.

Nav-Go Enterprises Inc. Statement of Stockholders’ Equity For the Year Ended December 31, 20Y1
	Common Stock	Paid-In Capital in Excess of Stated Value	Paid-In Capital from Sale of Treasury Stock	Retained Earnings	Treasury Stock	Total
Balances, January 1	$	$	$	$	$	$
Net Income
Cash Dividends
Stock Dividends
	$	$	$	$	$	$

4. Prepare the “Stockholders’ Equity” section of the December 31, 20Y1, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Nav-Go Enterprises Inc. Balance Sheet December 31, 20Y1
Stockholders' Equity
Paid-In Capital:
Common Stock, $10 Stated Value (800,000 Shares Authorized, 644,800 Shares Issued)
Treasury Stock (33,000 Shares, at Cost)
From Sale of Treasury Stock
Total Paid-In Capital
Retained Earnings
Total
Treasury Stock (33,000 Shares, at Cost)
Total Stockholders' Equity

Answer 1

Required 1 :
Common Stock
		Jan-01	$ 5,200,000
		Apr-13	$ 1,000,000
		Jun-16	$ 248,000
		Dec 31 Bal.	$ 6,448,000
Paid-In Capital In excess of Stated Value -Common Stock
		Jan-01	$ 1,000,000
		Apr-13	$ 600,000
		Jun-14	$ 198,400
		Dec 31 Bal.	$ 1,798,400
Retained Earnings
Dec-31	$ 544,288	Jan-01	$ 11,800,000
		Dec-31	$ 12,272,000
		Dec 31 Bal.	$ 23,527,712
Treasury Stock
Jan-01	$ 728,000	Mar-15	$ 728,000
Oct-30	$ 627,000
Dec 31 Bal.	$ 627,000
Paid In Capital from sale of Treasury Stock
		Mar-15	$ 156,000
Stock Dividend Distributable
Jun-16	$ 248,000	Jun-14	$ 248,000
Stock Dividends
Jun-14	$ 446,400	Dec-31	$ 446,400
Cash Dividends
Dec-30	$ 97,888	Dec-31	$ 97,888

.

Required 2 :
Date	Account	Debit	Credit
Jan-15	Cash Dividend Payable {(520,000-52,000)Shares*$0.13Per Share}	$ 60,840
	Cash		$ 60,840
	(To record Cash dividend paid )
Mar-15	Cash (52,000 shares * $17 )	$ 884,000
	Treasury Stock (52,000 shares * $ 14 Per share )		$ 728,000
	Paid in capital from sale of Treasury stock (884,000-728,000)		$ 156,000
	(To record Sold all treasury stock 52,000 shares @ $17 per share )
Apr-13	Cash (100,000 shares *$16 )	$ 1,600,000
	Common stock (100,000 shares *$10 )		$ 1,000,000
	Paid in capital in Excess of stated Value -Common Stock(1,600,000 -1,000,000)		$ 600,000
	(To record issue of 100,000 shares for $ 1,600,000 )
Jun-14	Stock dividend {(520,000+100,000)shares*4%*$18 )}	$ 446,400
	Stock dividend distributable (24,800 shares *$10 )		$ 248,000
	Paid in capital in Excess of stated Value -Common Stock(446,400 -248,000)		$ 198,400
	(To record 4 % Stock dividend declared on Common stock )
Jul-16	Stock dividend distributable (24,800 shares *$10 )	$ 248,000
	Common stock		$ 248,000
	(To record Issue of stock for Stock dividend declared on June 14 )
Oct-30	Treasury stock (33,000 shares *$19 Per share )	$ 627,000
	Cash		$ 627,000
	(To record Purchase Treasury stock 33,000 shares @ $19 Per Share )
Dec-30	Cash Dividend { (520,000+100,000+24,800-33,000)Shares*$0.16 Per share }	$ 97,888
	Cash Dividend Payable		$ 97,888
	(To record Cash Dividend Declared )
Dec-31	Retained earnings ($446,400 +$97,888)	$ 544,288
	Stock dividend		$ 446,400
	Cash Dividend		$ 97,888
	(To record Closed Two dividends accounts to Retained earnings )

.

Nav-Go Enterprises Inc.
Statement of Stockholders Equity
For the Year ended December 31, 20Y1
	Common	Paid-In Capital In excess	Paid In Capital from	Retained	Treasury	Total
	Stock	of Stated Value	sale of Treasury Stock	Earnings	Stock
Balances January 1	$ 5,200,000	$ 1,000,000		$ 11,800,000	($ 728,000)	$ 17,272,000
Issued Common Stock	$ 1,000,000	$ 600,000				$ 1,600,000
Net Income				$ 12,272,000		$ 12,272,000
Cash Dividends				($ 97,888)		($ 97,888)
Stock Dividends	$ 248,000	$ 198,400		($ 446,400 )		$ 0
Sale of Treasury Stock			$ 156,000		$ 728,000	$ 884,000
Purchase of Treasury stock					($627,000)	($627,000)
Balances , December 31	$ 6,448,000	$ 1,798,400	$ 156,000	$ 23,527,712	($627,000)	$31,303,112

Nav-Go Enterprises Inc.
Balance Sheet
December 31,20Y1
Stockholders' Equity :
Paid In Capital
Common Stock $ 10 Stated Value	$ 6,448,000
Paid in Capital in excess of Stated Value	$ 1,798,400
Paid in Capital from sale of Treasury stock	$ 156,000
Total Paid in Capital		$ 8,402,400
Retained Earnings		$ 23,527,712
Total Paid in Capital and Retained Earnings		$ 31,930,112
Less: treasury Stock (33,000 shares at Cost)		($627,000)
Total Stockholders' Equity		$ 31,303,112