Question

Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $10 par value, 300,000 shares authorized, 60,000 shares 600,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 960,000 From treasury stock 60,000 1,020,000 Retained earnings 696,000 2,316,000 Less: Treasury stock (6,000 shares) at cost 276,000 Total Stockholdersâ€TM Equity 2,040,000 The following transactions affecting stockholdersâ€TM equity occurred during the year: Jan. 8 Issued 15,000 shares of previously unissued common stock for $42 cash per share. Mar. 12 Sold all of the treasury shares for $56 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 $50 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 $52 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. b. Prepare a statement of stockholdersâ€TM equity. Net income for the year is $682,000.

Answer 1

Please find attached journal entries for said transactions:

Credit Debit 630,000.00 Date Dr. / Cr. Account Title 08-Jan Dr Cash Common Stock Cr Addtitional paid in capital 150,000.00 480,000.00 12-Mar Dr 336,000.00 6000 shares @ $ 56 per share Cash Treasury Stock Paid in capital from Treasury stock 276,000.00 60,000.00 30-Jun Dr 187,500.00 Stock Dividends Stock Dividend Distributable Addtitional paid in capital (60000 shares + 15000 shares )75000 shares * 5% * $50 per share 37,500.00 75000 shares * 5% * $10 per share 150,000.00 75000 shares * 5% * $40 per share Cr 37,500.00 10-Jul Dr cr Stock Dividend Distributable Common Stock 75000 shares * 5% * $10 per share 37,500.00 75000 shares * 5% * $10 per share 07-Oct Dr Treasury Stock Cash 130,000.00 2500 shares @ $ 52 per share | 130,000.00 2500 shares @ $ 52 per share 18-Dec Dr Cash Dividend Dividend Payable 72,500.00 |(75000 shares - 2500 shares )72500 shares * $1 per share | 72,500.00 (75000 shares - 2500 shares )72500 shares * $1 per share O shares - 2500 shares 172500 shares * $1 per share C 31-Dec Dr 682,000.00 Income Summary Retained Earnings 682,000.00 31-Dec Dr 260,000.00 Retained Earnings Cash Dividend Stock Dividends 72,500.00 187,500.00 Cr

Please find attached Statement of stocholder's equity:

Statement of stockholder's Equity Paid in capital Common paid in capital in from treasury stock excess of par stock 600,000.00 960,000.00 60,000.00 150,000.00 480,000.00 60,000.00 37,500.00 150,000.00 Retained earnings 696,000.00 Treasury stock -276,000.00 Balance, January 1 Total 2,040,000.00 630,000.00 336,000.00 15000 Common shares issued 6000 Treasury shares sold 276,000.00 Stock Dividends Issued -187,500.00 2500 Treasury shares acquired -130,000.00 Cash Dividends Declared Net Income Balance, December 31 -72,500.00 682,000.00 1,118,000.00 -130,000.00 -72,500.00 682,000.00 3,485,500.00 787,500.00 1,590,000.00 120,000.00 -130,000.00