Stockholders’ Equity (January 1) Common stock—$10 par value, 130,000 shares authorized, 50,000 shares issued and outstanding $ 500,000 Paid-in capital in excess of par value, common stock 75,000 Retained earnings 410,000 Total stockholders’ equity $ 985,000 Stockholders’ Equity (December 31) Common stock—$10 par value, 130,000 shares authorized, 56,370 shares issued, 4,500 shares in treasury $ 563,700 Paid-in capital in excess of par value, common stock 151,440 Retained earnings ($90,000 restricted by treasury stock) 740,000 1,455,140 Less cost of treasury stock (90,000 ) Total stockholders’ equity $ 1,365,140 The following transactions and events affected its equity during the year. Jan. 5 Declared a $0.80 per share cash dividend, payable on January 10. Mar. 20 Purchased treasury stock for cash. Apr. 5 Declared a $0.80 per share cash dividend, payable on April 10. July 5 Declared a $0.80 per share cash dividend, payable on July 10. July 31 Declared a 14% stock dividend when the stock’s market value was $22 per share. Aug. 14 Issued the stock dividend that was declared on July 31. Oct. 5 Declared a $0.80 per share cash dividend, date of record October 10. 1. Prepare a Journal Entry for each transaction 2. Prepare General Ledger Account General Ledger Account Cash No. Date Debit Credit Balance Jan 01 1,609,436 Common stock No. Date Debit Credit Balance Jan 01 500,000 Paid-in capital, Common No. Date Debit Credit Balance Jan 01 75,000 Retained earnings No. Date Debit Credit Balance Jan 01 410,000 Income summary No. Date Debit Credit Balance Jan 01 (624,436)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Stockholders’ Equity (January 1)
Common stock—$10 par value, 130,000 shares authorized, 50,000 shares issued and outstanding	$	500,000
Paid-in capital in excess of par value, common stock		75,000
Retained earnings		410,000
Total stockholders’ equity	$	985,000

Stockholders’ Equity (December 31)
Common stock—$10 par value, 130,000 shares authorized, 56,370 shares issued, 4,500 shares in treasury	$	563,700
Paid-in capital in excess of par value, common stock		151,440
Retained earnings ($90,000 restricted by treasury stock)		740,000
		1,455,140
Less cost of treasury stock		(90,000	)
Total stockholders’ equity	$	1,365,140

The following transactions and events affected its equity during the year.

Jan.	5	Declared a $0.80 per share cash dividend, payable on January 10.
Mar.	20	Purchased treasury stock for cash.
Apr.	5	Declared a $0.80 per share cash dividend, payable on April 10.
July	5	Declared a $0.80 per share cash dividend, payable on July 10.
July	31	Declared a 14% stock dividend when the stock’s market value was $22 per share.
Aug.	14	Issued the stock dividend that was declared on July 31.
Oct.	5	Declared a $0.80 per share cash dividend, date of record October 10.

1. Prepare a Journal Entry for each transaction

2. Prepare General Ledger Account

General Ledger Account

Cash
No.	Date	Debit	Credit	Balance
	Jan 01			1,609,436

Common stock
No.	Date	Debit	Credit	Balance
	Jan 01			500,000

Paid-in capital, Common
No.	Date	Debit	Credit	Balance
	Jan 01			75,000

Retained earnings
No.	Date	Debit	Credit	Balance
	Jan 01			410,000

Income summary
No.	Date	Debit	Credit	Balance
	Jan 01			(624,436)

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