Entries for Selected Corporate Transactions Nay-Go Enterprises Inc. produces aeronautical navigation equipment. Nav-Go Enterprises' stockholders' equity accounts, with balances on January 1, 20Y1, are as follows: Common Stock, $10 stated value (450,000 shares authorized, 300,000 shares issued) $3,000,000 Paid-In Capital in Excess of Stated Value-Common Shock 550,000 Retained Earnings 6,810,000 Treasury Stock (30,000 shares, at cost) 420,000 The following selected transactions occurred during the year: Jan. 15. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding scal year for $35,100. Mar. 15. Sold all ofthe treasury stock for $1? per share. Apr. 13. Issued 55,000 sharia of common stock for $990,000. June 14. Declared a 5% stock dividend on common stock, to be capitalized at the market price of the stock, which is $20 per share. July 15. Issued shares of shock for the stock dividend declared on June 14. Oct. 30. Purchased 19,000 shares of treasury stock 'For $19 per share. Dec. 30. Declared a $0.16-penshare dividend on common stock. 31. Closed the two dividends accounts to Retained Earnings. Required: 1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate. If required, round to one decimal place. Common Stock Jan. 1 Bal. 3,000,000 Apr. 13 550,000 July 16 177,500 Dec. 31 Bal. 3,727,500 Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 550,000 Apr. 13 440,000 V June 14 177,500 Dec. 31 Bal. 1,167,500 Retained Earnings Dec. 31 411,600 V Jan. 1 Bal. 6,810,000 Dec. 31 V 7,082,000 Dec. 31 Bal. 13,480,400Treasury Stock Jan. 1 Bal. 420,000 Mar. 15 420,000 Oct. 30 361,000 V Dec. 31 Bal. 361,000 Paid-In Capital from Sale of Treasury Stock Mar. 15 90,000 Stock Dividends Distributable July 16 177,500 June 14 177,500 Stock Dividends June 14 355,000 |Dec. 31 355,000 Cash Dividends Dec. 30 V 56,600 v Dec. 31 56,6002. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank. Jan. 15. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding scal year for $35,100. E coil; E my! Mar. 15. Sold all of the treasury stock for $1]Ir per share. lpr. 13. Issued 55,000 shares of common stock for $990,000 990,000 _ mm June 14. Declared a 5% on common stuck, to be capitalized at the market price of the stack, which is $20 per share. July 16. Issued stack for stock dividend declared on June 14. Dec. 30. Declared a $0.16-per-share dividend on common stock. Date Account Debit Credit Dec. 30 Cash Dividends 56,600 Cash Dividends Payable 56,600 V Dec. 31. Closed the two dividends accounts to Retained Earnings. Date Account Debit Credit Dec. 31 Retained Earnings 411,600 Stock Dividends V 355,000 Cash Dividends 56,600Prepare a statement of stockholders' equity for the year ended December 31, 20Y1. Assume that net income was $7,082,000 for the year ended December 31, 20Y1. or those boxes in which you must enter subtracted or negative numbers use a minus sign. If an amount box does not require an entry, leave it blank or enter "0". Nav-Go Enterprises Inc. Statement of Stockholders' Equity For the Year Ended December 31, 20Y1 Paid-In Capital in Paid-In Excess of Capital from Sale of Retained Treasury Common Stock Stated Value Treasury Stock Earnings Stock Total Balances, January 1 3,000,000 V 550,000 V 0 $ 6,810,000 V 420,000 X $ 9,940,000 sued Common Stock V 550,000 440,000 990,000 Net Income 7,082,000 7,082,000 Cash Dividends 59,640 X 59,640 X Stock Dividends V 177,500 V 177,500 V 355,000 X Sale of Treasury Stock V 90,000 420,000 510,000 Purchase of Treasury Stock 361,000 X 361,000 X Balances, December 31 V $ 3,727,500 V $ 1,167,500 V 90,000 V $ 13,477,360 X $ 361,000 X 18,101,360 X4. Prepare the "Stockholders' Equity" section of the December 31, 20Y1, balance sheet. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Nav-Go Enterprises Inc. Balance Sheet December 31, 20Y1 Stockholders' Equity Paid-In Capital: Common Stock, $10 Stated Value (450,000 Shares Authorized, 372,750 Shares Issued) VS 3,727,500 V Excess of Issue Price Over Stated Value 1,167,500 V From Sale of Treasury Stock 90,000 Total Paid-In Capital S 4,985,000 V Retained Earnings 13,477,360 X Total 18,462,360 X Treasury Stock (19,000 Shares, at Cost) - V 361,000 X Total Stockholders' Equity 18,101,360 X Feedback Check My Work 1. Remember that the numbers from the T accounts will used to prepare the statement of stockholders' equity and the balance sheet. As you post the journal entries it is important to work carefully. Check your work to insure that you have posted the correct numbers to the appropriate side of the T account. Also, make sure that your account totals are correct. 2. The purchase of treasury stock is typically recorded using the cost method. When the company resells shares of treasury stock pay attention to the price these shares are being sold for and the price originally paid to reacquire these shares. On the date of declaration of a cash dividend, the corporation is legally obligated to pay that dividend. When the company declares a cash or stock dividend keep in mind the previous stock transactions that have occurred; would these transactions have any affect on the amount of the cash dividend? 3. Review the example of the statement of stockholders' equity in the chapter. Pay particular attention to the treatment of dividends, and the purchase and sale of treasury stock. Recall that the statement of stockholders' equity shows the beginning balances of common stock and retained earnings. The common stock balance will be increased by any stock issued during the period and retained earnings will be increased by any net income, and decreased by any net losses and dividends. 4. A stockholders' equity section of the balance sheet is made up of separately reported paid-in capital, retained earnings, and treasury stock. Recall that paid-in capital includes separate reporting of each class of stock. Treasury stock held by a corporation reduces stockholders' equity