Question

Stockholders' Equity: Transactions and Statement
The stockholders' equity section of Night Corporation's balance sheet at January 1 follows:

Common stock, $10 par value, 300,000 shares authorized, 60,000 shares		600,000
issued, 6,000 shares in treasury
Additional paid-in capital
In excess of par value	960,000
From treasury stock	60,000	1,020,000
Retained earnings		696,000
		2,316,000
Less: Treasury stock (6,000 shares) at cost		276,000
Total Stockholders’ Equity		2,040,000

The following transactions affecting stockholders’ equity occurred during the year:

Jan.	8	Issued 15,000 shares of previously unissued common stock for $42 cash per share.
Mar.	12	Sold all of the treasury shares for $56 cash per share.
June	30	Declared a five percent stock dividend on all outstanding shares of common stock. The market value of the stock was $50 per share.
July	10	Issued the stock dividend declared on June 30.
Oct.	7	Acquired 2,500 shares of common stock as treasury stock at $52 cash per share.
Dec.	18	Declared a cash dividend of $1.00 per outstanding common share, payable on January 9 to stockholders of record on December 31.

Required
a. Prepare journal entries to record the foregoing transactions.
b. Prepare a statement of stockholders’ equity. Net income for the year is $682,000.

• Journal Entries
• Statement of Stockholders' Equity

General Journal
Date	Description	Debit	Credit
Jan.8	Answer

Answer	Answer
	Answer

Answer	Answer
	Paid-in-Capital in Excess of Par Value	Answer	Answer
	Issued shares of common stock.
Mar.12	Answer

Answer	Answer
	Answer

Answer	Answer
	Paid-in-Capital from Treasury Stock	Answer	Answer
	Sold shares of treasury stock.
Jun.30	Answer

Answer	Answer
	Answer

Answer	Answer
	Paid-in-Capital in Excess of Par Value	Answer	Answer
	Declared stock dividend.
Jul.10	Answer

Answer	Answer
	Answer

Answer	Answer
	Issued shares of common stock declared as dividend.
Oct.7	Answer

Answer	Answer
	Answer

Answer	Answer
	Purchased shares of common stock for treasury.
Dec.18	Answer

Answer	Answer
	Answer

Answer	Answer
	Declared cash dividend.
Dec.31	Answer

Answer	Answer
	Answer

Answer	Answer
	To close the income summary account.
Dec.31	Answer

Answer	Answer
	Stock dividends	Answer	Answer
	Answer

Answer	Answer
	To close the dividend accounts.

Note: Use negative signs with your answers when appropriate (reduction to retained earnings, acquired treasury stock and treasury stock balances).

Night Corporation Statement of Stockholders' Equity For Year Ended December 31
		Common Stock	Paid-in-Capital in Excess of Par	Paid-in-Capital from Treasury Stock	Retained Earnings	Treasury Stock	Total
Balance, January 1		Answer	Answer	Answer	Answer	Answer	Answer
Answer	Common shares issued	Answer	Answer	Answer	Answer	Answer	Answer
Answer	Treasury shares sold	Answer	Answer	Answer	Answer	Answer	Answer
Stock Dividends Issued		Answer	Answer	Answer	Answer	Answer	Answer
Answer	Treasury shares acquired	Answer	Answer	Answer	Answer	Answer	Answer
Cash Dividends Declared		Answer	Answer	Answer	Answer	Answer	Answer
Net Income		Answer	Answer	Answer	Answer	Answer	Answer
Balance, December 31		Answer	Answer	Answer	Answer	Answer	Answer

Answer 1