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.

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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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.

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
Balance, January 1
0 Common shares issued
O Treasury shares sold
Stock Dividends Issued
O Treasury shares acquired
Cash Dividends Declared
Net Income
Balance, December 31
Common
Stock
$
$
Paid-in-Capital
from
Paid-in-Capital
in Excess of Par Treasury Stock
0 $
0
0
0
0
0
0
0 $
0
0
0
0
0
0
0
0 $
$
$
Retained Treasury
Earnings Stock
0
0
0
0
0
0
0
0 $
0 $
0
0
0
0
0
0
0 $
0 $
0
0
0
0
0
0
0 $
Total
0
0
ܘ
ܘ
ܘ
ܘ
ܘ
ܘ
ܘ

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.
Issued shares of common stock declared as dividend.
+
To close the income summary account.
Stock dividends
+ $
To close the dividend accounts.
O
O
(
♦
(
O
Debit
0 $
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Credit
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

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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