Accounting for various stockholders’ equity transactions (Learning Objectives 5, 6, 7) 20–25 min.

The balance sheet of Relaxation, Inc., at December 31, 2013, reported 650,000 shares of $2 par common stock authorized with 120,000 shares issued and outstanding.

Paid-in Capital in Excess of Par had a balance of $310,000. Retained Earnings had a balance of $140,000. During 2014, the company completed the following selected transactions:

Feb 15 Mar 8 Sep 28 Purchased 5,000 shares of treasury stock at $6 per share.

Sold 1,000 shares of treasury stock for $13 per share.

Declared and distributed a 5% stock dividend on the 116,000 shares of outstanding common stock. The market value of Relaxation’s common stock was $7 per share.

Requirements 1. Record the transactions in the journal. Explanations are not required.

2. Prepare the stockholders’ equity section of the balance sheet at December 31, 2014, assuming the company earned $74,000 of net income during the year.

AppendixLO1