Stockholders\' Equity: Transactions and Statement The stockholders\' equity sect
ID: 2599390 • 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 treasury
Additional paid-in capital
In excess of par value
240,000
From treasury stock
15,000
255,000
Retained earnings
174,000
609,000
Less: Treasury stock (6,000 shares) at cost
69,000
Total Stockholders’ Equity
540,000
The following transactions affecting stockholders’ 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.
7
Acquired 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 31.
Required
a. Prepare journal entries to record the foregoing transactions.
General Journal
Date
Description
Debit
Credit
Jan.8
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
$Answer
$Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Paid-in-Capital in Excess of Par Value
Answer
Answer
Issued shares of common stock.
Mar.12
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Paid-in-Capital from Treasury Stock
Answer
Answer
Sold shares of treasury stock.
Jun.30
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Paid-in-Capital in Excess of Par Value
Answer
Answer
Declared stock dividend.
Jul.10
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Issued shares of common stock declared as dividend.
Oct.7
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Purchased shares of common stock for treasury.
Dec.18
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Declared cash dividend.
Dec.31
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
To close the income summary account.
Dec.31
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
Stock dividends
Answer
Answer
AnswerCashCommon StockPaid-in-Capital in Excess of Par ValueTreasury StockPaid-in-Capital from Treasury StockStock DividendsStock Dividend DistributableCash DividendsDividends PayableIncome SummaryRetained earnings
Answer
Answer
To close the dividend accounts.
b. Prepare a statement of stockholders’ equity. Net income for the year is $170,500.
Use negative signs with your answers when appropriate (reduction to retained earnings, acquired treasury stock and treasury stock balances).
Night Corporation
Statement of Stockholders' Equity
For Year Ended December 31
Common
Stock
Paid-in-Capital
in Excess of Par
Paid-in-Capital
from
Treasury Stock
Retained
Earnings
Treasury
Stock
Total
Balance, January 1
$Answer
$Answer
$Answer
$Answer
$Answer
$Answer
Answer
Common shares issued
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Treasury shares sold
Answer
Answer
Answer
Answer
Answer
Answer
Stock Dividends Issued
Answer
Answer
Answer
Answer
Answer
Answer
Answer
Treasury shares acquired
Answer
Answer
Answer
Answer
Answer
Answer
Cash Dividends Declared
Answer
Answer
Answer
Answer
Answer
Answer
Net Income
Answer
Answer
Answer
Answer
Answer
Answer
Balance, December 31
$Answer
$Answer
$Answer
$Answer
$Answer
$Answer
Common stock, $3 par value, 300,000 shares authorized, 60,000 shares
180,000
issued, 6,000 shares in treasury
Additional paid-in capital
In excess of par value
240,000
From treasury stock
15,000
255,000
Retained earnings
174,000
609,000
Less: Treasury stock (6,000 shares) at cost
69,000
Total Stockholders’ Equity
540,000
Explanation / Answer
Journal Entry date Accounting titles & explanations Debit Credit 8-Jan Cash 150000 common stock (15000*3) 45000 addittional paid in capital in excess of par 105000 12-Mar cash (6000*14) 84000 Treasury stock 69,000 Addittional paid in capital from TS 15,000 30-Jun retained earnings (75000*5%)*12 45000 stock div distrbutable (3750*3( 11250 Addittional paid in capital in excess of par 33750 10-Jul Stock dividend distributable 11,250 common stock 11,250 7-Oct Treasury stock 32500 cash (2500*13) 32,500 18-Dec Retained earnings 76250 Dividends payable 76,250 (76250*1) paid in paid in capital Retained Treasury total 2) Common capital in from earnings stock stock excess of par TS balance Jan1 180,000 240,000 15,000 174,000 -69,000 540,000 common shares issue 45,000 105,000 150,000 treasury stock sold 15,000 69,000 84000 stock dividends issued 11,250 33,750 -45000 0 treasury shares acquired -32,500 -32500 cash dividends decalred -76250 -76250 net income 170,500 170500 balance ,December 31 236,250 378,750 30,000 223,250 -32,500 835,750