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 (850,000 shares authorized, 560,000 shares issued)	$5,600,000
Paid-In Capital in Excess of Stated Value-Common Stock	1,050,000
Retained Earnings	12,710,000
Treasury Stock (56,000 shares, at cost)	784,000

The following selected transactions occurred during the year:

Jan. 15.	Paid cash dividends of $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $75,600.
Mar. 15.	Sold all of the treasury stock for $17 per share.
Apr. 13.	Issued 105,000 shares of common stock for $1,680,000.
June 14.	Declared a 5% 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 35,000 shares of treasury stock for $19 per share.
Dec. 30.	Declared a $0.18-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 $0.15 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $75,600.

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $13,218,000 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.

Answer 1

1.

2.

Date	Account	Debit	Credit
Jan-15	Dividend Payable	$                     75,600
	Cash		$                 75,600
	(Being Dividend paid)
Mar-15	Cash	$                 9,52,000
	Treasury Stock		$             7,84,000
	Additional Paid-In Capital-Treasury Stock		$             1,68,000
	(Being Treasury stock sold)
Apr-13	Cash	16,80,000
	Common Stock (105000*10)		$           10,50,000
	Paid-In Capital in Excess of Stated Value-Common Stock		$             6,30,000
	(Being Common stock issued)
Jun-14	Stock Dividends (560000+105000)*5%*$18	$                 5,98,500
	Common Stock Dividend Distributable		$             3,32,500
	Paid-In Capital in Excess of Stated Value-Common Stock		$             2,66,000
	(Being 5% Stock dividend (33250 shares) declared @ 18 per share)
Jul-16	Common Stock Dividend Distributable	$                 3,32,500
	Common Stock		$             3,32,500
	(Being stock dividend issued)
Oct-30	Treasury Stock	$                 6,65,000
	Cash		$             6,65,000
	(Being 35000 Treasury stock purchased @$19 per stock)
Dec-30	Dividend (Cash)	$                 1,19,385
	Dividend Payable		$             1,19,385
	(Being dividend declared)
	(560000+105000+33250-35000)*$0.18
	**35000 - Treasury Stock
Dec-31	Retained Earnings	$                 7,17,885
	Stock Dividends		$             5,98,500
	Dividend (Cash)		$             1,19,385

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3.

Statement of Stockholders Equity
	Common	Paid-in Capital	Additional	Retained	Treasury	Total
	Stock	in excess	Paid-in Capital	Earnings	Stock	Shareholders'
		of par value	Treasury Stock			Equity
		Common Stock
January 1,	$          56,00,000	$          10,50,000		$    1,27,10,000	$        -7,84,000	$        1,85,76,000
Issuance of common stock	$          10,50,000	$             6,30,000		-	-	$           16,80,000
Issuance of stock dividend	$            3,32,500	$             2,66,000				$              5,98,500
Sale of treasury stock			$             1,68,000		$          7,84,000	$              9,52,000
Purchase of treasury stock					$        -6,65,000	$            -6,65,000
Cash Dividends				$        -1,19,385		$            -1,19,385
Stock dividend				$        -5,98,500		$            -5,98,500
Net income				$    1,32,18,000		$        1,32,18,000
December 31,	$          69,82,500	$          19,46,000	$             1,68,000	$    2,52,10,115	$        -6,65,000	$        3,36,41,615

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4.

Stockholders' Equity
Paid in Capital
Common Stock	$          69,82,500
Paid-In Capital in Excess of Stated Value-Common Stock	$          19,46,000
Additional Paid-In Capital-Treasury Stock	$            1,68,000
Total Paid in Capital	$          90,96,500
Retained Earnings	$      2,52,10,115
Sub Total	$      3,43,06,615
Less: Treasury Stock at cost (35000*$19)	$            6,65,000
Total Stockholders' Equity	$      3,36,41,615

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