Question

Entries for Selected Corporate Transactions

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.

Required:

1. The January 1 balances in T accounts for the stockholders’ equity accounts have been listed below. T accounts for the following accounts have also been created: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.

Common Stock
		Jan. 1 Bal.	3,100,000
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.	1,240,000
		Dec. 31 Bal.

Retained Earnings
		Jan. 1 Bal.	4,875,000
		Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.	288,000
Dec. 31 Bal.

Paid-In Capital from Sale of Treasury Stock

Stock Dividends Distributable

Stock Dividends

Cash Dividends

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

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.

Date	Account	Debit	Credit
Jan. 15

Mar. 15. Sold all of the treasury stock for $6.75 per share.

Date	Account	Debit	Credit
Mar. 15

Apr. 13. Issued 200,000 shares of common stock for $8 per share.

Date	Account	Debit	Credit
Apr. 13

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.

Date	Account	Debit	Credit
June 14

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

Date	Account	Debit	Credit
July 16

Oct. 30. Purchased 50,000 shares of treasury stock for $6 per share.

Date	Account	Debit	Credit
Oct. 30

Dec. 30. Declared an $0.08-per-share dividend on common stock.

Date	Account	Debit	Credit
Dec. 30

Dec. 31. Closed the credit balance of the income summary account, $775,000.

Date	Account	Debit	Credit
Dec. 31

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

Date	Account	Debit	Credit
Dec. 31

3. Prepare a retained earnings statement for the year ended December 31, 20Y1.

Nav-Go Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 20Y1

4. Prepare the Stockholders’ Equity section of the December 31, 20Y1, balance sheet.

Nav-Go Enterprises Inc. Balance Sheet December 31, 20Y1
Stockholders' Equity
Paid-In-Capital:
Total Paid-In Capital
Total
Total Stockholders' Equity

Answer 1