Ivy Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Ivy Enterprises Inc., with balances on January 1, 2010, are as follows:

The following selected transactions occurred during the year:

Jan. 7. Paid cash dividends of $0.18 per share on the common stock. The dividend had been properly recorded when declared on November 30 of the preceding fiscal year for $66,600.

Feb. 9. Issued 50,000 shares of common stock for $600,000

May 21. Sold all of the treasury stock for $300,000

July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $13 per share.

Aug. 15. Issued the certificates for the dividend declared on July 1

Sept. 30. Purchased 10,000 shares of treasury stock for $100,000

Dec. 27. Declared a $0.20-per-share dividend on common stock.

31. Closed the credit balance of the income summary account, $485,000.

31. Closed the two dividends accounts to Retained Earnings.

Instructions

1. Enter the January 1 balances in T accounts for the stockholders’ equity accounts listed. Also prepare T accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends.

2. Journalize the entries to record the transactions, and post to the eight selected accounts.

3. Prepare a retained earnings statement for the year ended December 31, 2010.

4. Prepare the Stockholders’ Equity section of the December 31, 2010, balance sheet.

Transcribed Image Text:

Common Stock, $8 stated value (600,000 shares authorized, 400,000 shares issued)..... Paid-In Capital in Excess of Stated Value Retained Earnings... Treasury Stock (30,000 shares, at cost). $3,200,000 600,000 7,100,000 240,000