In: Accounting
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 (350,000 shares authorized, 240,000 shares issued) | $2,400,000 |
Paid-In Capital in Excess of Stated Value-Common Stock | 450,000 |
Retained Earnings | 5,450,000 |
Treasury Stock (24,000 shares, at cost) | 336,000 |
The following selected transactions occurred during the year:
Jan. 15. | Paid cash dividends of $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,920. |
Mar. 15. | Sold all of the treasury stock for $17 per share. |
Apr. 13. | Issued 45,000 shares of common stock for $720,000. |
June 14. | Declared a 4% 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 15,000 shares of treasury stock for $19 per share. |
Dec. 30. | Declared a $0.15-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. | 2,400,000 | ||
Apr. 13 | |||
July 16 | |||
Dec. 31 Bal. |
Paid-In Capital in Excess of Stated Value-Common Stock | |||
---|---|---|---|
Jan. 1 Bal. | 450,000 | ||
Apr. 13 | |||
June 14 | |||
Dec. 31 Bal. |
Retained Earnings | |||
---|---|---|---|
Dec. 31 | Jan. 1 Bal. | 5,450,000 | |
Dec. 31 | |||
Dec. 31 Bal. |
Treasury Stock | |||
---|---|---|---|
Jan. 1 Bal. | 336,000 | ||
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 $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,920.
Date | Account | Debit | Credit |
---|---|---|---|
Jan. 15 | |||
Mar. 15. Sold all of the treasury stock for $17 per share.
Date | Account | Debit | Credit |
---|---|---|---|
Mar. 15 | |||
Apr. 13. Issued 45,000 shares of common stock for $720,000
Date | Account | Debit | Credit |
---|---|---|---|
Apr. 13 | |||
June 14. Declared a 4% on common stock, to be capitalized at the market price of the stock, which is $18 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 15,000 shares of treasury stock for $19 per share.
Date | Account | Debit | Credit |
---|---|---|---|
Oct. 30 | |||
Dec. 30. Declared a $0.15-per-share dividend on common stock.
Date | Account | Debit | Credit |
---|---|---|---|
Dec. 30 | |||
Dec. 31. Closed the two dividends accounts to Retained Earnings.
Date | Account | Debit | Credit |
---|---|---|---|
Dec. 31 | |||
3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $5,668,000 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 Stock | Paid-In Capital in Excess of Stated Value |
Paid-In Capital from Sale of Treasury Stock |
Retained Earnings |
Treasury Stock |
Total | |
$ | $ | $ | $ | $ | $ | |
$ | $ | $ | $ | $ | $ |
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 |
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. | $ 2,400,000.00 | ||
Apr. 13 | $ 450,000.00 | ||
16-Jul | $ 114,000.00 | ||
Dec. 31 Bal. | $ 2,964,000.00 | ||
Paid-In Capital in Excess of Stated Value-Common Stock | |||
Jan. 1 Bal. | $ 450,000.00 | ||
Apr. 13 | $ 270,000.00 | ||
14-Jun | $ 91,200.00 | ||
Dec. 31 Bal. | $ 811,200.00 | ||
Retained Earnings | |||
Dec. 31 | $ 247,410.00 | Jan. 1 Bal. | 5,450,000 |
Dec. 31 | 5668000 | ||
Dec. 31 Bal. | $ 10,870,590.00 | ||
Treasury Stock | |||
Jan. 1 Bal. | 336,000 | Mar.15 | $ 336,000.00 |
Oct.30 | $ 285,000.00 | ||
Dec. 31 Bal. | $ 621,000.00 | ||
Paid-In Capital from Sale of Treasury Stock | |||
Mar. 15 | $ 72,000.00 | ||
Stock Dividends Distributable | |||
16-Jul | $ 114,000.00 | 14-Jun | $ 114,000.00 |
Stock Dividends | |||
14-Jun | $ 205,200.00 | 31-Dec | $ 205,200.00 |
Cash Dividends | |||
Dec.30 | $ 42,210.00 | 31-Dec | $ 42,210.00 |
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 $0.12 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,920. | |||
Date | Account | Debit | Credit |
Jan. 15 | Cash Dividends Payable [(240,000 shares – 24,000 shares) × $0.12] | $ 25,920.00 | |
Cash | $ 25,920.00 | ||
Mar. 15. Sold all of the treasury stock for $17 per share. | |||
Date | Account | Debit | Credit |
Mar. 15 | Cash (24,000 shares × $17) | $ 408,000.00 | |
Treasury Stock (24,000 shares × $14.00) | $ 336,000.00 | ||
Paid-In Capital from Sale of Treasury Stock | $ 72,000.00 | ||
Apr. 13. Issued 45,000 shares of common stock for $720,000 | |||
Date | Account | Debit | Credit |
Apr. 13 |
Cash (45,000 shares × $16) |
$ 720,000.00 | |
Common Stock (45,000 shares × $10) |
$ 450,000.00 | ||
Paid-In Capital in Excess of Stated Value—Common Stock |
$ 270,000.00 | ||
June 14. Declared a 4% on common stock, to be capitalized at the market price of the stock, which is $18 per share. | |||
Date | Account | Debit | Credit |
14-Jun | Stock Dividends [(240,000 shares + 45,000 shares) × 4% × $18] | $ 205,200.00 | |
Stock Dividends Distributable[(240,000 shares + 45,000 shares) × 4% = 11400 × $10] | $ 114,000.00 | ||
Paid-In Capital in Excess of Stated Value—Common Stock | $ 91,200.00 | ||
July 16. Issued stock for stock dividend declared on June 14. | |||
Date | Account | Debit | Credit |
16-Jul | Stock Dividends Distributable | $ 114,000.00 | |
Common stock | $ 114,000.00 | ||
Oct. 30. Purchased 15,000 shares of treasury stock for $19 per share. | |||
Date | Account | Debit | Credit |
Oct. 30 | Treasury Stock (15,000 shares × $19) | $ 285,000.00 | |
Cash | $ 285,000.00 | ||
Dec. 30. Declared a $0.15-per-share dividend on common stock. | |||
Date | Account | Debit | Credit |
Dec. 30 | Cash Dividends | $ 42,210.00 | |
Cash Dividends Payable | $ 42,210.00 | ||
(240,000 shares + 45000 shares + 11400 shares - 15000 shares) x $.15 | |||
Dec. 31. Closed the two dividends accounts to Retained Earnings. | |||
Date | Account | Debit | Credit |
Dec. 31 | Retained Earnings | $ 247,410.00 | |
Cash Dividend | $ 42,210.00 | ||
Stock Dividend | $ 205,200.00 |