Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $10 par value, 300,000 shares authorized, 60,000 shares 600,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 960,000 From treasury stock 60,000 1,020,000 Retained earnings 696,000 2,316,000 Less: Treasury stock (6,000 shares) at cost 276,000 Total StockholdersTM Equity 2,040,000 The following transactions affecting stockholdersTM equity occurred during the year: Jan. 8 Issued 15,000 shares of previously unissued common stock for $42 cash per share. Mar. 12 Sold all of the treasury shares for $56 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 $50 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 $52 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 $682,000. Required a. Prepare journal entries to record the foregoing transactions b. Prepare a statement of stockholdersTM equity. Net income for the year is $682,000. Journal Entries Statement of Stockholders' Equity Credit Debit 630,000 $ $ 150,000 480,000 336,000 276,000 60,000 960,000 x 0 37,500 960,000 x 37,500 General Journal Date Description Jan.8 Cash Common Stock Paid-in-Capital in Excess of Par Value Issued shares of common stock. Mar.12 Cash Treasury Stock Paid-in-Capital from Treasury Stock Sold shares of treasury stock. Jun 30 Stock Dividends Stock Dividend Distributable Paid-in-Capital in Excess of Par Value Declared stock dividend. Jul. 10 Stock Dividend Distributable Common Stock Issued shares of common stock declared as dividend. Oct.7 Treasury Stock Cash Purchased shares of common stock for treasury. Dec. 18 Cash Dividends Dividends Payable Declared cash dividend. Dec.31 Income Summary Retained earnings To close the income summary account. Dec.31 Retained earnings Stock dividends Cash Dividends To close the dividend accounts. 37,500 130,000 130,000 17,500 x 2,500 x 0 % 0 Ox 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 Pald-in-Capital Common Paid-in-Capital from Stock in Excess of Par Treasury Stock Ox $ 0 x $ Ox $ 0x 0 x O 0 x OX Retained Earnings 0 * Treasury Stock Ox $ $ Total 0x 0 x 0x Ox Balance, January 1 0x common shares issued 0x Treasury shares sold Stock Dividends Issued 0x Treasury shares acquired Cash Dividends Declared Net Income Balance, December 31 0 x 0 0 0 x Ox 0 x 0 x 0x 0x ox Ox $ ox $ ox $ $
