Nav-Go Enterprises Inc. produces aeronautical navigation equipment. The stockholders equity accounts of Nav-Go Enterprises Inc., with balances

Question:

Nav-Go Enterprises Inc. produces aeronautical navigation equipment. The stockholders’ equity accounts of Nav-Go Enterprises Inc., with balances on January 1, 20Y3, are as follows:

The following selected transactions occurred during the year:

Jan. 15. Paid cash dividends of $0.06 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $34,320.

Mar. 15. Sold all of the treasury stock for $6.75 per share.

Apr. 13. Issued 200,000 shares of common stock for $8 per share.

June 14. Declared a 3% stock dividend on the common stock, to be capitalized at the market price of the stock, which is $7.50 per share.

July 16. Issued the certificates for the dividend declared on June 14.

Oct. 30. Purchased 50,000 shares of treasury stock for $6 per share.
Dec. 30. Declared a $0.08-per-share dividend on common stock.

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, 20Y3. Assume that Nav-Go Enterprises had net income for the year ended December 31, 20Y3, of $775,000.
4. Prepare the Stockholders’ Equity section of the December 31, 20Y3, balance sheet using Method 1 of Exhibit 8.

Method 1 of Exhibit 8