Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders\' equi
ID: 2464410 • 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:
The following selected transactions occurred during the year:
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.
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.
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.
Dec. 31. Closed the credit balance of the income summary account, $10,390,000.
Dec. 31. Closed the two dividends accounts to Retained Earnings.
3. Prepare a retained earnings statement for the year ended December 31, 2014.
4. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet.
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) 660,000Explanation / Answer
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-01 44,00,000 Apr-03 850000 15-Aug 220000 31-Dec 54,70,000 Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 8,50,000 03-Apr 410000 01-Jul 176000 31-Dec 14,36,000 Retained Earnings 31-Dec 478050 Jan. 1 Bal. 99,90,000 31-Dec 10390000 Dec. 31 Bal. 1,99,01,950 Treasury Stock Jan. 1 Bal. 6,60,000 06-Jun 660000 10-Nov 560000 Dec. 31 Bal. 5,60,000 Paid-In Capital from Sale of Treasury Stock 06-Jun 132000 Stock Dividends Distributable 15-Aug 220000 01-Jul 220000 Stock Dividends 01-Jul 396000 31-Dec 396000 Cash Dividends 27-Dec 82050 31-Dec 82050 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 Cash Dividends Payable A/c 47520 Cash A/c 47520 Apr. 3. Issued 85,000 shares of common stock for $1,360,000. Date Account Debit Credit Apr. 3 Cash A/c 1360000 Common Stock A/c 850000 Paid-In Capital in Excess of Stated Value-Common Stock A/c 410000 June 6. Sold all of the treasury stock for $792,000. Date Account Debit Credit Jun-06 Cash A/c 792000 Treasury Stock A/c 660000 Paid-In Capital from Sale of Treasury Stock A/c 132000 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 Jul-01 Stock Dividends A/c 396000 Stock Dividends Distributable A/c 220000 Paid-In Capital in Excess of Stated Value-Common StockStock A/c 176000 Aug. 15. Issued the certificates for the dividend declared on July 1. Date Account Debit Credit Aug. 15 Stock Dividends Distributable A/c 220000 Common Stock A/c 220000 Nov. 10. Purchased 28,000 shares of treasury stock for $560,000. Date Account Debit Credit Nov. 10 Treasury Stock A/c 560000 Cash A/c 560000 Dec. 27. Declared a $0.15-per-share dividend on common stock. Date Account Debit Credit Dec. 27 Cash Dividends A/c 82050 Cash Dividend Payable A/c 82050 Dec. 31. Closed the credit balance of the income summary account, $10,390,000. Date Account Debit Credit Dec. 31 Income Summary A/c 10390000 Retained Earnings A/c 10390000 Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 Retained Earnings A/c 478050 Cash Dividends A/c 82050 Stock Dividends A/c 396000 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 Retained Earnings,January 1, 2014 9990000 Net Income 10390000 Less Cash Dividends 82050 Less Stock Dividends 396000 Increase in Retained Earnings 9911950 Retained Earnings, December 31, 2014 19901950 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: Common Stock, $10 Stated Value (547,000 shares) 5470000 Excess of Stated Value-Common Stock 1436000 CashFrom Sale of Treasury Stock 132000 Total Paid-In Capital 7038000 Retained Earnings 19901950 Total 26939950 Deduct Treasury Stock (at Cost) 560000 Total Stockholders' Equity 26379950