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 (700,000 shares authorized, 480,000 shares issued)	$4,800,000
Paid-In Capital in Excess of Stated Value-Common Stock	900,000
Retained Earnings	10,900,000
Treasury Stock (48,000 shares, at cost)	672,000

The following selected transactions occurred during the year:

Jan. 15.	Paid cash dividends of $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $60,480.
Mar. 15.	Sold all of the treasury stock for $17 per share.
Apr. 13.	Issued 90,000 shares of common stock for $1,620,000.
June 14.	Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share.
July 16.	Issued shares of stock for the stock dividend declared on June 14.
Oct. 30.	Purchased 30,000 shares of treasury stock for $19 per share.
Dec. 30.	Declared a $0.17-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.

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 $0.14 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $60,480.

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $11,336,000 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”.

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.

V

Answer 1

Kindly fill appropriately since the formats required have not been provided with the question.

1.

Common Stock					Treasury Stock
		Jan. 1 Bal.	4800000		Jan. 1 Bal.	672000	Mar. 15	672000
		Apr. 13	900000		Oct. 30	570000
		Jul. 16	228000		Dec. 31 Bal.	570000
		Dec. 31 Bal.	5928000
					Paid-in Capital from Sale of Treasury Stock
Paid-in Capital in Excess of Stated Value							Mar. 15	144000
		Jan. 1 Bal.	900000				Dec. 31 Bal.	144000
		Apr. 13	720000
		Jun. 14	228000		Stock Dividends Distributable
		Dec. 31 Bal.	1848000		Jul. 16	228000	Jun. 14	228000
							Dec. 31 Bal.	0
Retained Earnings
Dec. 31	456000	Jan. 1 Bal.	10900000		Stock Dividends
Dec. 31	95676	Dec. 31	11336000		Jun. 14	456000	Dec. 31	456000
		Dec. 31 Bal.	21684324		Dec. 31 Bal.	0
Cash Dividends Payable					Cash Dividends
Jan. 15	60480	Jan. 1 Bal.	60480		Dec. 30	95676	Dec. 31	95676
		Dec. 30	95676		Dec. 31 Bal.	0
		Dec. 31 Bal.	95676

2.

Date	Description	Debit	Credit
Jan. 15	Cash dividends payable	60480
	Cash		60480
Mar. 15	Cash (48000 x $17)	816000
	Treasury stock		672000
	Paid-in capital from sale of treasury stock		144000
Apr. 13	Cash	1620000
	Common stock (90000 x $10)		900000
	Paid-in capital in excess of stated value-common stock		720000
Jun. 14	Stock dividends (22800 x $20)*	456000
	Stock dividends distributable (22800 x $10)		228000
	Paid-in capital in excess of stated value-common stock		228000
Jul. 16	Stock dividends distributable	228000
	Common stock		228000
Oct. 30	Treasury stock (30000 x $19)	570000
	Cash		570000
Dec. 30	Cash dividends**	95676
	Cash dividends payable		95676
Dec. 31	Income summary	11336000
	Retained earnings		11336000
Dec. 31	Retained earnings	551676
	Stock dividends		456000
	Cash dividends		95676

*[4% x (480000-48000+48000+90000)] = 4% x 570000 = 22800 shares

**[$0.17 x (570000 + 22800 - 30000)] = $0.17 x 562800 = $95676

3.

NAV-GO ENTERPRISES INC.
Retained Earnings Statement
For the Period Ended December 31, 20Y1
Retained earnings (January 1, 20Y1)		10900000
Net income	11336000
Less: Cash dividends	95676
Stock dividends	456000
Increase in retained earnings		10784324
Retained earnings (December 31, 20Y1)		21684324

4.

NAV-GO ENTERPRISES INC.
Balance Sheet
December 31, 20Y1
Stockholders' Equity
Paid-in capital:
Common stock, $10 stated value
(700,000 shares authorized, 592,800 shares issued)	5928000
Excess of issue price over stated value	1848000
From sale of treasury stock	144000
Total paid-in capital		7920000
Retained earnings		21684324
Total		29604324
Deduct treasury stock (30,000 shares at cost)		570000
Total stockholders' equity		29034324