Nav-Go Enterprises Inc produces aeronautical navigation equipment. The stockhold
ID: 2419383 • Letter: N
Question
Nav-Go Enterprises Inc produces aeronautical navigation equipment. The stockholders' equity accounts of Nav-Go Enterprises Inc., with balances on January 1, 2014, are as follows: The following selected transactions occurred during the year: Jan. 15. Paid cash dividends of $0.06 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $34,320. Mar. 15. Sold all of the treasury stock for $6.75 per share. Apr. 13. Issued 200,000 shares of common stock for $8 per share. Jun 14. Declared a 3% stock dividend on common stock, to be capitalized at the market price of the stock, which is $7.50 per share. July 16. Issued the certificates for the dividend declared on June 14. Oct. 30 Purchased 50,000 shares of treasury stock for $6 per share. Dec. 30. Declared a $0.08-per-share dividend on common stock. 31 Closed the credit balance of the income summary account, $775,000. 31 Closed the two dividends accounts to Retained Earnings. Enter the January 1 balances in T accounts for the stockholders' equity accounts listed. Also prepare t accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable; Stock Dividends; Cash Dividends. Journalize the entries to record the transactions, and post to the eight selected accounts. Prepare a retained earnings statement for the year ended December 31, 2014. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet.Explanation / Answer
1. T accounts are given below:
2. Journal entries:
Jan 15th: Cash Dividends payable (Dr) $34,320
Cash (Cr) $34,320
[620,000 - 48,000 treasury shares]*0.06
Mar 15th: Cash (Dr) 324,000
Treasury stock (Cr) 288,000
Paid in capital from treasury stock (Cr) $36,000
[cash = 48,000*6.75], [treasury stock = 48,000*6], paid in capital is the difference
April 13th: Cash (Dr) $1,600,000
Common stock (Cr) $1,000,000
Paid in capital (Cr) $600,000
[cash = 200,000*8], [stock = 200,000*5] paid in capital is the difference
June 14th: Dividends (Dr) 184,500
Dividends distributrable (Cr) 184,500
[820,000 shares*$7.5*3%]
July 16th: Dividends distributable (Dr) 184,500
Common stock (Cr) 184,500
[certificates issued for dividend declared]
Oct 30th: Treasury Stock (Dr) 300,000
Cash (Cr) 300,000
[50,000 stock*$6]
Dec 30th: Cash Dividends (Dr) $61,600
Cash dividends payable (Cr) $61,600
[820,000 shares - 50,000 treasury]*0.08
Dec 31: Income (profit and loss account) (Dr) $775,000
Retained earnings (Cr) $775,000
Dec 31: Retained earnings (Dr) 246,100
Stock dividend (Cr) 184,500
Cash dividend (Cr) 61,600
3. Retained earnings statement:
4. Stockholder's equity section:
Common stock Date Particulars Amount Date Particulars Amount 1-Jan-2014 Opening balance 3,100,000 13-Apr-2014 Issue of stock (200,000*$5) 1,000,000 16-Jul-2014 Stock dividend (820,000*$7.5*3%) 184,500 31-Dec-2014 Closing balance 4,284,500 Paid in capital Date Particulars Amount Date Particulars Amount 1-Jan-2014 Opening balance 1,240,000 13-Apr-2014 Premium on issue of stock (200,000*(8-5) 600,000 31-Dec-2014 Closing balance 1,840,000 Retained earnings Date Particulars Amount Date Particulars Amount 14-Jun-2014 Stock dividend (820,000*$7.5*3%) 184,500 1-Jan-2014 Opening balance 4,875,000 30-Dec-2014 Cash dividend (820,000-50,000)*0.08 61,600 31-Dec-2014 Income summary account 775,000 31-Dec-2014 Closing balance 5,403,900 Treasury stock Date Particulars Amount Date Particulars Amount 1-Jan-2014 Opening balance 288,000 15-Mar-2014 Sale of treasury stock 288,000 30-Oct-2014 Purchase of stock (50,000*6) 300,000 31-Dec-2014 Closing balance 300,000 Paid in capital (treasury) Date Particulars Amount Date Particulars Amount 15-Mar-2014 Sale of treasury stock (48,000*(6.75-6)) 36,000 Stock dividends Date Particulars Amount Date Particulars Amount 14-Jun-2014 Stock dividend (820,000*$7.5*3%) 184,500 Cash dividends Date Particulars Amount Date Particulars Amount 30-Dec-2014 Cash dividend (820,000-50,000)*0.08 61,600Related Questions
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