Stockholders' Equity: Transactions and StatementThe stockholders' equity section of Night Corporation's balance sheet at January 1 follows:Common stock, $3 par value, 300,000 shares authorized, 60,000 shares 180,000issued, 6,000 shares in treasury Additional paid-in capital In excess of par value240,000 From treasury stock15,000255,000Retained earnings 174,000 609,000Less: Treasury stock (6,000 shares) at cost 69,000Total Stockholdersâ€™ Equity 540,000 The following transactions affecting stockholdersâ€™ equity occurred during the year:Jan.8Issued 15,000 shares of previously unissued common stock for $10 cash per share.Mar.12Sold all of the treasury shares for $14 cash per share.June30Declared a five percent stock dividend on all outstanding shares of common stock. The market value of the stock was $12 per share.July10Issued the stock dividend declared on June 30.Oct.7Acquired 2,500 shares of common stock as treasury stock at $13 cash per share.Dec.18Declared a cash dividend of $1.00 per outstanding common share, payable on January 9 to stockholders of record on December 31.Requireda. Prepare journal entries to record the foregoing transactions.b. Prepare a statement of stockholdersâ€™ equity. Net income for the year is $170,500. DateJan.8Mar.12Jun.30Jul.10Oct.7Dec. 18Dec.31Dec.31General JournalDescriptionPaid-in-Capital in Excess of Par ValueIssued shares of common stock.Paid-in-Capital from Treasury StockSold shares of treasury stock.Paid-in-Capital in Excess of Par ValueDeclared stock dividend.Purchased shares of common stock for treasury.Declared cash dividend.Stock dividendsTo close the income summary account.Issued shares of common stock declared as dividend.To close the dividend accounts.♦ $<45 4«<454LA4Debit$LACredit Balance, January 1Common shares issuedTreasury shares soldStock Dividends IssuedTreasury shares acquiredCash Dividends DeclaredNet IncomeBalance, December 31Night CorporationStatement of Stockholders' EquityFor Year Ended December 31$Common Paid-in-Capital fromStockPaid-in-CapitalLAin Excess of Par Treasury Stock$$$$RetainedTreasuryEarnings Stock$$$LA$LATotal

The journal entries are prepared to keep the record of day to day transactions of the business on…

Answered: Stockholders' Equity: Transactions and…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter11: Stockholders' Equity

Section: Chapter Questions

Problem 11.1E

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Question

Stockholders' Equity: Transactions and Statement
The stockholders' equity section of Night Corporation's balance sheet at January 1 follows:

Common stock, $3 par value, 300,000 shares authorized, 60,000 shares		180,000
issued, 6,000 shares in treasury
Additional paid-in capital
In excess of par value	240,000
From treasury stock	15,000	255,000
Retained earnings		174,000
		609,000
Less: Treasury stock (6,000 shares) at cost		69,000
Total Stockholdersâ€™ Equity		540,000

The following transactions affecting stockholdersâ€™ equity occurred during the year:

Jan.	8	Issued 15,000 shares of previously unissued common stock for $10 cash per share.
Mar.	12	Sold all of the treasury shares for $14 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 $12 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 $13 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 stockholdersâ€™ equity. Net income for the year is $170,500.

Date
Jan.8
Mar.12
Jun.30
Jul.10
Oct.7
Dec. 18
Dec.31
Dec.31
General Journal
Description
Paid-in-Capital in Excess of Par Value
Issued shares of common stock.
Paid-in-Capital from Treasury Stock
Sold shares of treasury stock.
Paid-in-Capital in Excess of Par Value
Declared stock dividend.
Purchased shares of common stock for treasury.
Declared cash dividend.
Stock dividends
To close the income summary account.
Issued shares of common stock declared as dividend.
To close the dividend accounts.
♦ $
<
45 4
«
<
45
4
LA
4
Debit
$
LA
Credit

Balance, January 1
Common shares issued
Treasury shares sold
Stock Dividends Issued
Treasury shares acquired
Cash Dividends Declared
Net Income
Balance, December 31
Night Corporation
Statement of Stockholders' Equity
For Year Ended December 31
$
Common Paid-in-Capital from
Stock
Paid-in-Capital
LA
in Excess of Par Treasury Stock
$
$
$
$
Retained
Treasury
Earnings Stock
$
$
$
LA
$
LA
Total

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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