On January 1, 2012, Kristen Corporation had the following stockholders\' equity

Question

On January 1, 2012, Kristen Corporation had the following stockholders' equity accounts. Common Stock ($24 par value, 55,000 shares issued and outstanding) $1,320,000 Paid-in Capital in Excess of Par Value 194,400 Retained Earnings 627,400 During the year, the following transactions occurred. Feb. 1 Declared a $2 cash dividend per share to stockholders of record on February 15, payable March 1. Mar. 1 Paid the dividend declared in February. Apr. 1 Announced a 2-for-1 stock split. Prior to the split, the market price per share was $32. July 1 Declared a 12 %stock dividend to stockholders of record on July 15, distributable July 31. On July 1, the market price of the stock was $18 per share. July 31 Issued the shares for the stock dividend. Dec. 1 Declared a $0.5 per share dividend to stockholders of record on December 15, payable January 5, 2013. Dec. 31 Determined that net income for the year was $332,570. Please help me journalize the transaction, Enter the beginning balances, and post the entries to the stockholders' equity accounts. and Prepare a stockholders' equity section at December 31.

Explanation / Answer

Apr 14 Sold 6,000 shares of treasury stock - common for $33,000 Unless otherwise stated, all purchases and sales of treasury stock should be recorded at its cost. There were 10,000 shares of treasury stock at a cost of $50,000, that's $5 each. The entry should be: Dr Cash 33,000 Cr Treasury Stock 30,000 Cr Paid in Capital from Treasury Stock 3,000 For the Sept. 3 entry, the credit should be to "Paid-In Capital in Excess of Stated Value". The same as the Feb. 1 entry. Nov 10 Purchased 1,000 shares o common stock for the treasury at a cost of $6000 Same explanation as above. Dr Treasury Stock 6,000 Cr Cash 6,000 Dec 31 Determined that net income for the year was $452,000 Revenues and expenses are closed to the "Income Summary" account. The Income Summary account is then closed to Retained Earnings. Dr Income Summary 452,000 Cr Retained Earnings 452,000 Before the entries, total Stockholders' Equity was: Prefered Stock (8%, $50 par, cummulative, 10,000 shares authorized) $400,000 Common stock ($1 stated value 2,000,000 shares authorized) $1,000,000 Paid in Captial in Excess of Par - Preferred stock $100,000 Paid in Capital in excess of stated value - common stock $1,450,000 Retained earnings $1,816,000 Treasury Stock (10,000 common shares) $50,000 Total Stockholders' Equity $4,716,000 *Treasury Stock is subtracted, all other amounts are added. After the entries the amounts are: Prefered Stock (8%, $50 par, cummulative, 10,000 shares authorized) $400,000 Common stock ($1 stated value 2,000,000 shares authorized) $1,060,000 Paid in Captial in Excess of Par - Preferred stock $100,000 Paid in Capital in excess of stated value - common stock $1,575,000 Paid-In capital from treasury stock 3,000 Retained earnings $2,268,000 Treasury Stock (10,000 common shares) $26,000 Total stockholders' equity $5,380,000

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