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 (600,000 shares authorized, 400,000 shares issued)$4,000,000

Paid-In Capital in Excess of Stated Value-Common Stock750,000

Retained Earnings9,080,000

Treasury Stock (40,000 shares, at cost)600,000

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 $50,400.

Mar. 15.Sold all of the treasury stock for $18 per share.

Apr. 13.Issued 75,000 shares of common stock for $1,350,000.

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 25,000 shares of treasury stock for $20 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.

Common Stock

  Jan. 1 Bal.4,000,000

   

   

  Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock

  Jan. 1 Bal.750,000

   

   

  Dec. 31 Bal.

Retained Earnings

Jan. 1 Bal.9,080,000

   

  Dec. 31 Bal.

Treasury Stock

Jan. 1 Bal.600,000

   

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. 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 $50,400.

DateAccountDebitCredit

Jan. 15

  

Mar. 15. Sold all of the treasury stock for $18 per share.

DateAccountDebitCredit

Mar. 15

  

  

Apr. 13. Issued 75,000 shares of common stock for $1,350,000

DateAccountDebitCredit

Apr. 13

  

  

June 14. Declared a 4% on common stock, to be capitalized at the market price of the stock, which is $20 per share.

DateAccountDebitCredit

June 14

  

  

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

DateAccountDebitCredit

July 16

  

Oct. 30. Purchased 25,000 shares of treasury stock for $20 per share.

DateAccountDebitCredit

Oct. 30

  

Dec. 30. Declared a $0.17-per-share dividend on common stock.

DateAccountDebitCredit

Dec. 30

  

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

DateAccountDebitCredit

Dec. 31

  

  

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $9,443,000 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”.

Nav-Go Enterprises Inc.
Statement of Stockholders’ Equity
For the Year Ended December 31, 20Y1

Common StockPaid-In
Capital in
Excess of
Stated ValuePaid-In
Capital from Sale of
Treasury StockRetained
EarningsTreasury
StockTotal

$$$$$$

$$$$$$

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.

Nav-Go Enterprises Inc.
Balance Sheet
December 31, 20Y1

Stockholders' Equity

Paid-In Capital:

  

  Total Paid-In Capital

  

Total

  

Total Stockholders' Equity

Answer 1