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 (650,000 shares authorized, 440,000 shares issued)	$4,400,000
Paid-In Capital in Excess of Stated Value-Common Stock	850,000
Retained Earnings	9,990,000
Treasury Stock (44,000 shares, at cost)	616,000

The following selected transactions occurred during the year:

Jan. 15.	Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $51,480.
Mar. 15.	Sold all of the treasury stock for $17 per share.
Apr. 13.	Issued 85,000 shares of common stock for $1,530,000.
June 14.	Declared a 5% 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 28,000 shares of treasury stock for $19 per share.
Dec. 30.	Declared a $0.16-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.	4,400,000
		Apr. 13
		July 16
		Dec. 31 Bal.

Paid-In Capital in Excess of Stated Value-Common Stock
		Jan. 1 Bal.	850,000
		Apr. 13
		June 14
		Dec. 31 Bal.

Retained Earnings
Dec. 31		Jan. 1 Bal.	9,990,000
		Dec. 31
		Dec. 31 Bal.

Treasury Stock
Jan. 1 Bal.	616,000	Mar. 15
Oct. 30
Dec. 31 Bal.

Paid-In Capital from Sale of Treasury Stock
		Mar. 15

Stock Dividends Distributable
July 16		June 14

Stock Dividends
June 14		Dec. 31

Cash Dividends
Dec. 30		Dec. 31

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 $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $51,480.

Date	Account	Debit	Credit
Jan. 15	Cash Dividends Payable
	Cash

Mar. 15. Sold all of the treasury stock for $17 per share.

Date	Account	Debit	Credit
Mar. 15	Cash
	Treasury Stock
	Paid-In Capital from Sale of Treasury Stock

Apr. 13. Issued 85,000 shares of common stock for $1,530,000

Date	Account	Debit	Credit
Apr. 13	Cash
	Common Stock
	Paid-In Capital in Excess of Stated Value-Common Stock

June 14. Declared a 5% on common stock, to be capitalized at the market price of the stock, which is $20 per share.

Date	Account	Debit	Credit
June 14	Stock Dividends
	Stock Dividends Distributable
	Paid-In Capital in Excess of Stated Value-Common Stock

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

Date	Account	Debit	Credit
July 16	Stock Dividends Distributable
	Common Stock

Oct. 30. Purchased 28,000 shares of treasury stock for $19 per share.

Date	Account	Debit	Credit
Oct. 30	Treasury Stock
	Cash

Dec. 30. Declared a $0.16-per-share dividend on common stock.

Date	Account	Debit	Credit
Dec. 30	Cash Dividends
	Cash Dividends Payable

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

Date	Account	Debit	Credit
Dec. 31	Retained Earnings
	Stock Dividends
	Cash Dividends

3. Prepare a statement of stockholders’ equity for the year ended December 31, 20Y1. Assume that net income was $10,390,000 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
Balances, January 1	$	$	$	$	$	$
Issued Common Stock
Net Income
Cash Dividends
Stock Dividends
Sale of Treasury Stock
Purchase of Treasury Stock
Balances, December 31	$	$	$	$	$	$

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:
Common Stock, $10 Stated Value (650,000 Shares Authorized, 551,250 Shares Issued)
Excess of Issue Price Over Stated Value
From Sale of Treasury Stock
Total Paid-In Capital
Retained Earnings
Total
Treasury Stock (28,000 Shares, at Cost)
Total Stockholders' Equity

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Answer 1

Part 1

Common stock
		Jan. 1 Bal.	4400000
		Apr. 13	850000
		July 16	262500
		Dec. 31 Bal.	5515250

Paid-in capital in excess of stated value – common stock
		Jan. 1 Bal.	850000
		Apr. 13	680000
		June 14	262500
		Dec. 31 Bal.	1792500

Retained earnings
Dec. 31	608720	Jan. 1 Bal.	9990000
		Dec. 31	10390000
		Dec. 31 Bal.	19771280

Treasury stock
Jan. 1 Bal.	616000	Mar. 15	616000
Oct. 30	532000
Dec. 31 Bal.	532000

Paid-in capital from sale of Treasury Stock
		Mar. 15	348000

Stock Dividends Distributable
July 16	262500	June 14	2625000

Stock Dividends
June 14	525000	Dec. 31	525000

Cash Dividends
Dec.30	83720	Dec. 31	83720

Part 2

No.	date	Account	Debit	Credit
1	Jan. 15	Cash Dividends Payable	51480
		Cash ((440000-44000)*0.13)		51480
2	Mar. 15	Cash (44000*17)	748000
		Treasury Stock (44000*14)		616000
		Paid-In Capital from Sale of Treasury Stock (44000*3)		132000
3	Apr. 13	Cash	1530000
		Common Stock (85000*10)		850000
		Paid-In Capital in Excess of Stated Value-Common Stock		680000
4	June 14	Stock Dividends ((440000+85000)*5%)*20	525000
		Stock Dividends Distributable ((440000+85000)*5%)*10		262500
		Paid-In Capital in Excess of Stated Value-Common Stock		262500
5	July 16	Stock Dividends Distributable	262500
		Common stock		262500
6	Oct. 30	Treasury Stock (28000*19)	532000
		Cash		532000
7	Dec. 30	Cash Dividends (440000+85000+26250-28000)*0.16	83720
		Cash Dividends payable		83720
8	Dec. 31	Retained Earnings	608720
		Stock Dividends		525000
		Cash Dividends		83720

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
Balances, January 1	4400000	850000		9990000	616000	14624000
Issued Common Stock	850000	680000				1530000
Net Income				10390000		10390000
Cash Dividends				(83720)		(83720)
Stock Dividends	262500	262500		(525000)		0
Sale of Treasury Stock			132000		(616000)	748000
Purchase of Treasury Stock					532000	(532000)
Balances, December 31	5512500	1792500	132000	19771280	532000	26676280

Part 4

Nav-Go Enterprises Inc. Balance Sheet December 31, 20Y1
Stockholders' Equity
Paid-In Capital:
Common Stock, $10 Stated Value (650,000 Shares Authorized, 551,250 Shares Issued)	5512500
Excess of Issue Price Over Stated Value	1792500
From Sale of Treasury Stock	132000
Total Paid-In Capital		7437000
Retained Earnings		19771280
Total		27208280
Treasury Stock (28,000 Shares, at Cost)		(532000)
Total Stockholders' Equity		$26676280