Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $4 par value, 300,000 shares authorized 60,000 shares issued, 6,000 240,000 shares in treasury Additional paid-in capital In excess par value 360,000 From treasury stock 22,500 382,500 Retained earnings 261,000 883,500 Less: Treasury stock (6,000 shares) at cost 103,500 Total Stockholders Equity 780,000 The following transactions affecting stockholdersTM equity occurred during the year: Jan. 8 Issued 15,000 shares of previously unissued common stock for $16 cash per share. Mar. 12 Sold all of the treasury shares for $21 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 $19 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 $20 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 stockholdersTM equity. Net income for the year is $255,750. Journal Entries Statement of Stockholders' Equity General Journal Description Date Debit Credit Jan.8 Cash 0 $ $ 240,000 $ 0 Common Stock a 60,000 180,000 Paid-in-Capital in Excess of Par Value Issued shares of common stock. Mar.12 Cash 126,000 0 Treasury Stock 0 103,500 Paid-in-Capital from Treasury Stock 07 22,500 Sold shares of treasury stock. Jun 30 Stock Dividends 0 x 0 Stock Dividend Distributable 07 0X Paid-in-Capital in Excess of Par Value 0 0X Declared stock dividend. Jul 10 Stock Dividend Distributable OX 0 Common Stock > 0X Issued shares of common stock declared as dividend. Oct.7 Treasury Stock 50,000 0 Cash 0 50,000 Purchased shares of common stock for treasury. Dec. 18 Cash Dividends OX 0 Dividends Payable > 0 0X Declared cash dividend. > 255,750 0 a > 07 255,750 Dec.31 Income Summary Retained earnings To close the income summary account. Dec.31 Retained earnings 0 x 0 Stock dividends 07 0X Cash Dividends . 07 0X To close the dividend accounts Journal Entries Statement of Stockholders' Equity Note: Use negative signs with your answers when appropriate (reduction to retained earnings, acquired treasury stock and treasury stock balances). Night Corporation Statement of Stockholders' Equity For Year Ended December 31 Common from Retained Stock Total Paid-in-Capital Paid-in-Capital Treasury in Excess of Par Treasury Stock Earnings Stock $360,000 $ 22,500 $ 261,000 $ (103,500) $ 780,000 180,000 240,000 $ 240,000 Balance, January 1 15,000 Common shares issued 6,000 Treasury shares sold 60,000 0 0 07 0 22,500 103,500 126,000 Stock Dividends Issued 15,000 x 56,250 X 0 (71,250) X 0 2,500 Treasury shares acquired 0 0 OX 0 X Cash Dividends Declared 0 0 (76,250) X 0 0 x Net Income 0 255,750 0 0 X Balance, December 31 $ 0 x $ 0 x $ 45,000 $ 45,000 x $ (50,000) $ OX