Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders\' equi
ID: 2463920 • Letter: T
Question
Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Tolbert Enterprises Inc., with balances on January 1, 2014, 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) 660,000 The following selected transactions occurred during the year: Jan. 4. 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 $47,520. Apr. 3. Issued 85,000 shares of common stock for $1,360,000. June 6. Sold all of the treasury stock for $792,000. July 1. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Aug. 15. Issued the certificates for the dividend declared on July 1. Nov. 10. Purchased 28,000 shares of treasury stock for $560,000. Dec. 27. Declared a $0.15-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $10,390,000. 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. Common Stock Jan. 1 Bal. 4,400,000 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 850,000 Dec. 31 Bal. Retained Earnings Jan. 1 Bal. 9,990,000 Dec. 31 Bal. Treasury Stock Jan. 1 Bal. 660,000 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. 4. 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 $47,520. Date Account Debit Credit Jan. 4 Apr. 3. Issued 85,000 shares of common stock for $1,360,000. Date Account Debit Credit Apr. 3 June 6. Sold all of the treasury stock for $792,000. Date Account Debit Credit June 6 July 1. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Date Account Debit Credit July 1 Aug. 15. Issued the certificates for the dividend declared on July 1. Date Account Debit Credit Aug. 15 Nov. 10. Purchased 28,000 shares of treasury stock for $560,000. Date Account Debit Credit Nov. 10 Dec. 27. Declared a $0.15-per-share dividend on common stock. Date Account Debit Credit Dec. 27 Dec. 31. Closed the credit balance of the income summary account, $10,390,000. 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, 2014. Tolbert Enterprises Inc. Retained Earnings Statement For the Year Ended December 31, 2014 4. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet. Tolbert Enterprises Inc. Stockholders' Equity As of December 31, 2014 Paid-In-Capital: Total Paid-In Capital Total Total Stockholders' Equity
Explanation / Answer
Date Accounts title Dr Cr Paid-In Capital in Excess of Stated Value-Common Stock 1-Jan Dividend Payable 47520 Date Particulars Amt Date Particular Amts Cash 47520 1-Jan Bal brought down 850000 (Paid dividend recorded previously) 3-Apr Cash 510000 15-Aug Stock dividend Distributable 176000 3-Apr Cash 1360000 31-Dec Balance c/d 1536000 Common Stock 850000 Paid-In Capital in Excess of Stated Value-Common Stock 510000 Common Stock Date Particulars Amt Date Particular Amts 6-Jun Cash 792000 1-Jan Bal brought down 4400000 Tresuary Stock 660000 3-Apr Cash 850000 Paid in capital from Sale of Tresary Stock 132000 15-Aug Stock dividend Distributable 220000 (sale of tresuary stock and excess of cost transferred to paid in capital) 31-Dec Balance c/d 5470000 1-Jul Retained Earnings 396000 Stock dividend Distributable 396000 (Being stock dividend declared @18 per share 5% of 440000) Retained Earnings Date Particulars Amt Date Particular Amts 15-Aug Stock dividend Distributable 396000 1-Jul Stock dividend Distributable 396000 1-Jan Bal brought down 9990000 Common Stock (440000*5%*10) 220000 27-Dec Dividend Payable 61800 31-Dec Income Summary 10390000 Paid-In Capital in Excess of Stated Value-Common Stock 176000 31-Dec Balance c/d 19922200 10-Nov Treasury Stock 560000 Treasury Stock Cash 560000 Date Particulars Amt Date Particular Amts (Being tresuary stock purchased for 28000 shares) 1-Jan Bal brought down 660000 6-Jun Cash 660000 10-Nov Cash 560000 27-Dec Retained Earnings 61800 Bal c/d 560000 Dividend Payable/ Distributable (440000-28000)*.15 61800 (Being casd dividend declared apart from tresury stock) Income Summary 10390000 Retained Earnings 10390000 Stock dividend Distributable (being income transferred retained earning) Date Particulars Amt Date Particular Amts Common Stock 220000 1-Jul Retained Earnings 396000 Paid-In Capital in Excess of Stated Value-Common Stock 176000 Statement of Retained Earnings 31 Dec 2014 $ Bal cd 0 Opening Balance 9990000 Add: Paid in capital from Sale of Tresary Stock Income Summary 10390000 Date Particulars Amt Date Particular Amts Less 6-Jun Cash 132000 Stock dividend Distributable 396000 31-Dec Balance c/d 132000 Dividend Payable 61800 Closing Balance 19922200 Stockholder equity as on 31 Dec 2014 Common Stock 5470000 Paid-In Capital in Excess of Stated Value-Common Stock 1536000 Paid in capital from Sale of Tresary Stock 132000 Retained Earnings 19922200 Less: Treasury Stock -560000 Stockholder equity 26500200