Stockholders\' Equity: Transactions and Statement The stockholders\' equity sect
ID: 2535594 • Letter: S
Question
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $3 par value, 300,000 shares authorized, 60,000 shares 180,000 issued, 6,000 shares in treasuny Additional paid-in capital In excess of par value 240,000 15,000 255,000 174,000 609,000 69,000 540,000 From treasury stock Retained earnings Less: Treasury stock (6,000 shares) at cost Total Stockholdersã Equity The following transactions affecting stockholdersâ equity occurred during the year: Jan. 8 Issued 15,000 shares of previously unissued common stock for $10 cash per share Mar. 12 Sold all of the treasury shares for $14 cash per share. June 30 Declared a five percent stock dividend on all outstanding shares of common stock. The market value of the stock was $12 per share July 10 Issued the stock dividend declared on June 30 Oct. 7Acquired 2,500 shares of common stock as treasury stock at $13 cash per share. Dec. 18 Declared a cash dividend of $1.00 per outstanding common share, payable on January 9 to stockholders of record on December 31Explanation / Answer
Solution a:
Solution b:
Journal Entries - Night Corporation Date Particulars Debit Credit 8-Jan Cash Dr $150,000.00 To Common Stock $45,000.00 To Paid in capital in excess of par value $105,000.00 (To record issue of bond at discount) (Being shares of common stock issued) 12-Mar Cash Dr $84,000.00 To Treasury Stock $69,000.00 To Paid up capital from treasury stock $15,000.00 (Being treasury share sold) 30-Jun Stock Dividend Dr (75000*5%*$12) $45,000.00 To Common stock dividend distributable $45,000.00 (Being stock dividend declared) 10-Jul Common Stock Dividend distributable Dr $45,000.00 To Common Stock (3750 * $3) $11,250.00 To Paid in capital in excess of par value $33,750.00 (Being stock dividend issued) 7-Oct Treasury Stock Dr (2500*$13) $32,500.00 To Cash $32,500.00 (Being own shares purchased) 18-Dec Dividend Dr [(78750-2500)*$1] $76,250.00 To Dividend Payable $76,250.00 (Being stock dividend declared) 31-Dec Income Summary Dr $170,500.00 To Retained Earnings $170,500.00 (Being income summary closed to retained earnings) 31-Dec Retained Earnings Dr $121,250.00 To Dividend $76,250.00 To Stock Dividend $45,000.00 (Being dividend account closed to retained earnings)