On December 31, 2014, YoYo Inc. had the following balances (all balances are nor

Question

On December 31, 2014, YoYo Inc. had the following balances (all balances are normal):

Accounts

Amount

Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding)

$1,000,000

Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding)

$1,000,000

Paid-in Capital in Excess of par, Common

150,000

Retained Earnings

700,000

The following events occurred during 2014 and were not recorded:

A. On January 1, YoYo declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.

B. On February 15, YoYo reacquired 1,000 shares of common stock for $20 each.

C. On March 31, YoYo reissued 250 shares of treasury stock for $25 each.

D. On July 1, YoYo reissued 500 shares of treasury stock for $16 each.

E. On October 1, YoYo declared full year dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15.

F. On December 15, YoYo split common stock 2 shares for 1.

G. Net Income for 2014 was $275,000.

Requirements:

Prepare journal entries for the transactions listed above.

Prepare a Stockholders' section of a classified balance sheet as of December 31, 2014.

Accounts

Amount

Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding)

$1,000,000

Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding)

$1,000,000

Paid-in Capital in Excess of par, Common

150,000

Retained Earnings

700,000

Explanation / Answer

Journal entries

To paid in excess of par

(100,000@5% = 5000 shares)

to Dividend payable - commons

(100,000 +5,000 - 1000 +250 +500)1.50

Stockholder Section

paid in captila

Preferred 10,000 shares @100                    1,000,000

Common stock 210,000@5                          1,050,000                   2,050,000

Paid in excess of par - common                                                        175,000

Retained earnings                                                                             692,875

total paid in capital                                                                         2,917,875

less:Treasury stock                                                                            (5,000)

total stockholders equity                                                                2,912,875

Date Description Debit Credit Jan 1 Retained earnings $75,000 to Stock dividend distributable(5000*10) $50,000

To paid in excess of par

(100,000@5% = 5000 shares)

25,000 Jan 31 stock dividend distributable $50,000 to Common stock $50,000 Feb 15 Treasury stock 20,000 To Cash(1000*20) 20,000 March 31 Cash $6250 To Treasury stock (250*50) $5,000 To paid in excess of par - Treasury stock 1,250 July 1 Cash 8,000 Paid in excess of par - treasury stock 1,250 Retained Earnings    750 To Treasury stock $10,000 Oct 1 Retained earnings $207,125 to Dividends payable- preferred 50,000

to Dividend payable - commons

(100,000 +5,000 - 1000 +250 +500)1.50

157,125 Oct 15 Dividend payable - preferred $50,000 Dividend payable - common 157,125 to cash $207,125 Dec 31 Income summary 275,000 To Retained earning s 275,000

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