Question

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

Common Stock, $5 stated value (900,000 shares authorized, 620,000 shares issued)	$3,100,000
Paid-In Capital in Excess of Stated Value—Common Stock	1,240,000
Retained Earnings	4,875,000
Treasury Stock (48,000 shares, at cost)	288,000

The following selected transactions occurred during the year:

Jan. 15.		Paid cash dividends of $0.06 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $34,320.
Mar. 15.		Sold all of the treasury stock for $6.75 per share.
Apr. 13.		Issued 200,000 shares of common stock for $8 per share.
June 14.		Declared a 3% stock dividend on common stock, to be capitalized at the market price of the stock, which is $7.50 per share.
July 16.		Issued stock for stock dividend declared on June 14.
Oct. 30.		Purchased 50,000 shares of treasury stock for $6 per share.
Dec. 30.		Declared an $0.08-per-share dividend on common stock.
31.		Closed the credit balance of the income summary account, $775,000.
31.		Closed the two dividends accounts to Retained Earnings.

Instructions

Enter the January 1 balances in T accounts for the stockholders' equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.

Journalize the entries to record the transactions, and post to the eight selected accounts.

Prepare a retained earnings statement for the year ended December 31, 20Y6.

Prepare the Stockholders' Equity section of the December 31, 20Y6, balance sheet.

	Common Stock						Treasury Stock
				Jan.   1 Bal.			Jan.   1 Bal.
							Dec. 31 Bal.
				Dec. 31 Bal.
							Paid-In Capital from Sale of Treasury Stock
	Paid-In Capital in Excess of Stated Value
				Jan.   1 Bal.						Dec. 31 Bal.
							Stock Dividends Distributable
				Dec. 31 Bal.
										Dec. 31 Bal.
	Retained Earnings						Stock Dividends
				Jan.   1 Bal.
							Dec. 31 Bal.
				Dec. 31 Bal.
							Cash Dividends
							Dec. 31 Bal.
	20Y1
	Jan. 15	Cash Dividends Payable
		Cash
	Mar. 15	Cash
		Treasury Stock
		Paid-In Capital from Sale of Treasury Stock
	Apr. 13	Cash
		Common Stock
		Paid-In Capital in Excess of Stated Value
	June 14	Stock Dividends
		Stock Dividends Distributable
		Paid-In Capital in Excess of Stated Value
	July 16	Stock Dividends Distributable
		Common Stock
	Oct. 30	Treasury Stock
		Cash
	Dec. 30	Cash Dividends
		Cash Dividends Payable
	31	Income Summary
		Retained Earnings
	31	Retained Earnings
		Stock Dividends
		Cash Dividends
NAV-GO ENTERPRISES INC.
Retained Earnings Statement
For the Period Ended December 31, 20Y1
	Retained earnings, January 1, 20Y1
	Net income
	Cash dividends
	Stock dividends
	Increase in retained earnings
	Retained earnings, December 31, 20Y1
NAV-GO ENTERPRISES INC.
Balance Sheet
December 31, 20Y1
Stockholders' Equity
	Paid-in capital:
	Common stock, $5 stated value
	(900,000 shares authorized, 844,600 shares issued)
	Excess of issue price over stated value
	From sale of treasury stock
	Total paid-in capital
	Retained earnings
	Total
	Deduct treasury stock (50,000 shares at cost)
	Total stockholders' equity

Answer 1

Answer 1.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
15-Jan	Cash Dividends Payable	34,320.00
	Cash		34,320.00
	(record the dividends paid)
15-Mar	Cash	324,000.00		48,000 shares X $6.75
	Treasury Stock		288,000.00	48,000 shares X $6
	Paid-in Capital in Excess of Stated Value - Treasury Stock		36,000.00	48,000 shares X $0.75
	(record the issue of treasury stock)
13-Apr	Cash	1,600,000.00		200,000 shares X $8
	Common Stock		1,000,000.00	200,000 shares X $5
	Paid-in Capital in Excess of Stated Value - Common Stock		600,000.00	200,000 shares X $3
	(Record the isuue of common stock)
14-Jun	Stock dividends	184,500.00		820,000 Shares X 3% X $7.50
	Stock Dividends Distributable		123,000.00	24,600 Shares X $5
	Paid-in Capital in Excess of Stated Value - Common Stock		61,500.00	24,600 Shares X $2.50
	(record the stock dividend declared)
16-Jul	Stock Dividends Distributable	123,000.00
	Common Stock		123,000.00
	(record the Common Stock issued as stock dividend)
30-Oct	Treasury Stock	300,000.00		50,000 Shares x $6
	Cash		300,000.00	50,000 Shares x $6
	(record the purchase of treasury stock)
30-Dec	Cash Dividends	63,568.00		794,600 shares X $0.08
	Cash Dividends Payable		63,568.00	794,600 shares X $0.08
	(record the cash dividends declared)
31-Dec	Income Summary	775,000.00
	Retained Earnings		775,000.00
	(record the net income earned)
31-Dec	Retained Earnings	248,068.00
	Stock Dividends		184,500.00
	Cash Dividends		63,568.00
	(record the amount transferred to retained earnings)

Answer 2.
Common Stock					Paid-in Capital in Excess of Stated Value - Common Stock					Paid-in Capital in Excess of Stated Value - Treasury Stock
Beg. Bal.		3,100,000.00			Beg. Bal.		1,240,000.00			Beg. Bal.		-
		1,000,000.00	13-Apr				600,000.00	13-Apr				36,000.00	15-Mar
		123,000.00	16-Jul				61,500.00	14-Jun
End. Bal.		4,223,000.00			End. Bal.		1,901,500.00			End. Bal.		36,000.00
Retained Earnings					Treasury Stock					Stock Dividends
Beg. Bal.		4,875,000.00			Beg. Bal.	288,000.00	288,000.00	15-Mar		Beg. Bal.	-	184,500.00	31-Dec
31-Dec	248,068.00	775,000.00	31-Dec		30-Oct	300,000.00				14-Jun	184,500.00
End. Bal.		5,401,932.00			End. Bal.	300,000.00				End. Bal.	-
Cash Dividends Payable					Stock Dividends Distributable					Cash Dividends
Beg. Bal.		34,320.00			Beg. Bal.		-			Beg. Bal.	-	63,568.00	31-Dec
15-Jan	34,320.00	63,568.00	30-Dec		16-Jul	123,000.00	123,000.00	14-Jun		30-Dec	63,568.00		,
End. Bal.		63,568.00			End. Bal.		-			End. Bal.	-

Answer 3.
Nav-Go Enterprises Inc.
Retained Earning Statement
For the Year ended Dec 31, 20Y1
Beginning Balance Jan 1, 20Y1	4,875,000.00
Net Income	775,000.00
Sub-Total	5,650,000.00
Stock Dividends	(184,500.00)
Cash Dividends	(63,568.00)
Ending Balance, Dec 31, 20Y1	5,401,932.00
Answer 4.
Nav-Go Enterprises Inc.
Balance Sheet Partial
As of Dec 31, 20Y1
Stockholders' Equity
Paid in Capital
Common Stock, $5 Stated Value (900,000 Shares authorized, 844,600 Issued)	4,223,000.00
			Paid-in Capital in Excess of Stated Value - Common Stock	1,901,500.00
Paid-in Capital in Excess of Stated Value - Treasury Stock	36,000.00
Total paid in Capital	6,160,500.00
Retained Earnings	5,401,932.00
Total	11,562,432.00
Treasury Stock (50,000 Shares)	(300,000.00)
Total Stockholders' Equity		11,262,432.00