Entries for Selected Corporate Transactions Tolbert Enterprises Inc. manufacture
ID: 2475207 • Letter: E
Question
Entries for Selected Corporate Transactions
Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Tolbert Enterprises Inc., with balances on January 1, 2014, are as follows:
The following selected transactions occurred during the year:
Required:
1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate.
2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.
Jan. 4. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,740.
Apr. 3. Issued 40,000 shares of common stock for $640,000.
June 6. Sold all of the treasury stock for $374,000.
July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
Aug. 15. Issued the certificates for the dividend declared on July 1.
Nov. 10. Purchased 14,000 shares of treasury stock for $266,000.
Dec. 27. Declared a $0.16-per-share dividend on common stock.
Dec. 31. Closed the credit balance of the income summary account, $5,190,000.
Dec. 31. Closed the two dividends accounts to Retained Earnings.
3. Prepare a retained earnings statement for the year ended December 31, 2014.
4. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet.
Entries for Selected Corporate Transactions
Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Tolbert Enterprises Inc., with balances on January 1, 2014, are as follows:
Common Stock, $10 stated value (350,000 shares authorized, 220,000 shares issued) $2,200,000 Paid-In Capital in Excess of Stated Value-Common Stock 400,000 Retained Earnings 4,990,000 Treasury Stock (22,000 shares, at cost) 308,000The following selected transactions occurred during the year:
Jan. 4. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,740. Apr. 3. Issued 40,000 shares of common stock for $640,000. June 6. Sold all of the treasury stock for $374,000. July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share. Aug. 15. Issued the certificates for the dividend declared on July 1. Nov. 10. Purchased 14,000 shares of treasury stock for $266,000. Dec. 27. Declared a $0.16-per-share dividend on common stock. 31. Closed the credit balance of the income summary account, $5,190,000. 31. Closed the two dividends accounts to Retained Earnings.Required:
1. The January 1 balances have been entered in T accounts for the stockholders' equity accounts. Record the above transactions in the T accounts and provide the December 31 balance where appropriate.
Common Stock Jan. 1 Bal. 2,200,000 SelectApr. 3June 6July 1Dec. 27Item 1 SelectJuly 1Aug. 15Jan. 1Dec. 27Item 3 Dec. 31 Bal. Paid-In Capital in Excess of Stated Value-Common Stock Jan. 1 Bal. 400,000 SelectApr. 3June 6July 1Dec. 27Item 6 SelectAug. 15June 6July 1Dec. 27Item 8 Dec. 31 Bal. Retained Earnings SelectApr. 3June 6July 1Dec. 31Item 11 Jan. 1 Bal. 4,990,000 SelectJan. 1June 6Nov. 10Dec. 31Item 13 Dec. 31 Bal. Treasury Stock Jan. 1 Bal. 308,000 SelectApr. 3June 6July 1Dec. 31Item 16 SelectJan. 1June 6Nov. 10Dec. 31Item 18 Dec. 31 Bal. Paid-In Capital from Sale of Treasury Stock SelectJan. 1June 6Nov. 10Dec. 27Item 21 Stock Dividends Distributable SelectJan. 1Aug. 15Nov. 10Dec. 31Item 23 SelectJan. 1July 1Nov. 10Dec. 31Item 25 Stock Dividends SelectJan. 1July 1Nov. 10Dec. 31Item 27 SelectJan. 1July 1Nov. 10Dec. 31Item 29 Cash Dividends SelectJan. 1July 1Nov. 10Dec. 27Item 31 SelectJan. 1July 1Nov. 10Dec. 31Item 332. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank.
Jan. 4. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,740.
Date Account Debit Credit Jan. 4 SelectCashCash DividendsCash Dividends PayableCommon StockStock Dividends DistributableItem 35 SelectCashCash DividendsCash Dividends PayableCommon StockStock DividendsItem 37Apr. 3. Issued 40,000 shares of common stock for $640,000.
Date Account Debit Credit Apr. 3 SelectCashCommon StockPaid-In Capital from Sale of Treasury StockPaid-In Capital in Excess of Stated Value-Common StockTreasury StockItem 39 SelectCashCash DividendsCommon StockStock DividendsTreasury StockItem 42 SelectCashCash Dividends PayablePaid-In Capital from Sale of Treasury StockPaid-In Capital in Excess of Stated Value-Common StockPreferred StockItem 45June 6. Sold all of the treasury stock for $374,000.
Date Account Debit Credit June 6 SelectCashCommon StockPaid-In Capital in Excess of Stated Value-Common StockRetained EarningsTreasury StockItem 48 SelectCashCommon StockPaid-In Capital in Excess of Stated Value-Common StockRetained EarningsTreasury StockItem 51 SelectCommon StockPaid-In Capital from Sale of Treasury StockPreferred StockRetained EarningsStock Dividends DistributableItem 54July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
Date Account Debit Credit July 1 SelectCashCommon StockPaid-In Capital in Excess of Stated Value-Common StockStock DividendsStock Dividends DistributableItem 57 SelectCashCommon StockPaid-in Capital from Sale of Treasury StockStock Dividends DistributableTreasury StockItem 60 SelectCashCash DividendsPaid-In Capital in Excess of Stated Value-Common StockStock DividendsTreasury StockItem 63Aug. 15. Issued the certificates for the dividend declared on July 1.
Date Account Debit Credit Aug. 15 SelectCashCash Dividends PayableCommon StockStock DividendsStock Dividends DistributableItem 66 SelectCashCash Dividends PayableCommon StockStock DividendsStock Dividends DistributableItem 68Nov. 10. Purchased 14,000 shares of treasury stock for $266,000.
Date Account Debit Credit Nov. 10 SelectCashCommon StockPaid-In Capital from Sale of Treasury StockStock DividendsTreasury StockItem 70 SelectCashCommon StockPaid-In Capital from Sale of Treasury StockStock Dividends DistributableTreasury StockItem 72Dec. 27. Declared a $0.16-per-share dividend on common stock.
Date Account Debit Credit Dec. 27 SelectCashCash DividendsCash Dividends PayableCommon StockTreasury StockItem 74 SelectCashCash Dividends PayableCommon StockStock DividendsStock Dividends DistributableItem 76Dec. 31. Closed the credit balance of the income summary account, $5,190,000.
Date Account Debit Credit Dec. 31 SelectCashCommon StockIncome SummaryPaid-In Capital in Excess of Stated Value-Common StockRetained EarningsItem 78 SelectCashCommon StockIncome SummaryPaid-In Capital in Excess of Stated Value-Common StockRetained EarningsItem 80Dec. 31. Closed the two dividends accounts to Retained Earnings.
Date Account Debit Credit Dec. 31 SelectCashCash DividendsRetained EarningsStock DividendsStock Dividends DistributableItem 82 SelectCashCommon StockRetained EarningsStock DividendsStock Dividends DistributableItem 85 SelectCashCash DividendsIncome SummaryRetained EarningsTreasury StockItem 883. Prepare a retained earnings statement for the year ended December 31, 2014.
Tolbert Enterprises Inc.Retained Earnings Statement
For the Year Ended December 31, 2014 SelectCashNet IncomeRetained Earnings, December 31, 2014Retained Earnings, January 1, 2014Item 91 SelectDecrease in Retained EarningsNet IncomeRetained Earnings, January 1, 2014Retained Earnings, December 31, 2014Item 93 SelectLess CashLess Cash DividendsLess Retained Earnings, January 1, 2014Item 95 SelectLess CashLess Retained Earnings, January 1, 2014Less Stock Dividends DistributableLess Stock DividendsItem 97 SelectDecrease in Retained EarningsIncrease in Retained EarningsRetained Earnings, January 1, 2014Retained Earnings, December 31, 2014Item 99 SelectDecrease in Retained EarningsIncrease in Retained EarningsRetained Earnings, January 1, 2014Retained Earnings, December 31, 2014Item 101
4. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet.
Tolbert Enterprises Inc.Stockholders' Equity
As of December 31, 2014 Paid-In-Capital: SelectCashCommon Stock, $10 Stated ValueRetained EarningsTreasury Stock (at Cost)Item 103 SelectCashExcess of Stated Value-Common StockRetained EarningsTreasury Stock (at Cost)Item 105 SelectCashFrom Sale of Treasury StockRetained EarningsTreasury Stock (at Cost)Item 107 Total Paid-In Capital SelectExcess of Stated Value-Common StockFrom Sale of Treasury StockRetained EarningsTreasury Stock (Shares at Cost)Item 110 Total SelectDeduct Paid-in-Capital in Excess of Stated Value-Common StockDeduct CashDeduct Retained EarningsDeduct Treasury Stock (at Cost)Item 113 Total Stockholders' Equity
Explanation / Answer
1. 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
Use bleow journal entries to enter the amounts
2. Journalize the entries to record the transactions. For a compound transaction, if an amount box does not require an entry, leave it blank
Jan. 4. Paid cash dividends of $0.13 per share on the common stock. The dividend had been properly recorded when declared on December 1 of the preceding fiscal year for $25,740.
Dr Common Dividends Payable 25,740
Cr Cash 25,740
Apr. 3. Issued 40,000 shares of common stock for $640,000
Dr Cash 640,000
Cr Common Stock 400,000 (40,000 x $10 par value)
Cr Additional Paid-In Capital 240,000
June 6. Sold all of the treasury stock for $374,000.
Dr Cash 374,000
Cr Common (Treasury) Stock 308,000
Cr Additional Paid-In Capital 66,000
July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $18 per share.
400,000 - 22,000 + 40,000 + 22,000 = 454,000 shares outstanding
Dr Stock Dividends 316,800 (440,000 x 4% x $18market price)
Cr Stock Dividends Distributable 176,000 (440,000 x 4% x 10 par value)
Cr Additional Paid-In Capital140,800 (440,000 x 4% x 8 excess of par value)
Aug. 15. Issued the certificates for the dividend declared on July 1.
Dr Stock Dividends Distributable 176,000
Cr Common Stock 176,000
Nov. 10. Purchased 14,000 shares of treasury stock for $266,000.
Dr Common (Treasury) Stock 266,000
Cr Cash 266,000
Dec. 27. Declared a $0.16-per-share dividend on common stock.
400,000 - 22,000 + 40,000 + 22,000 +17,600 - 14,000 = 443,600 shares now outstanding
Dr Cash Dividends 70,976(443,600 x $0.16)
Cr Common Dividends Payable 70,976
Dec. 31. Closed the credit balance of the income summary account, $5,190,000
Dr Income Summary 5,190,000
Cr Retained Earnings 5,190,000
Dec. 31. Closed the two dividends accounts to Retained Earnings
Dr Retained Earnings 316,800
Cr Stock Dividends 316,800
Dr Retained Earnings 140,800
Cr Cash Dividends 140,800
3. Prepare a retained earnings statement for the year ended December 31, 2014
4,990,000 Beginning balance
+ 5,190,000
- 316.800
- 140,800
= 9,722,400 Ending balance
4. Prepare the Stockholders' Equity section of the December 31, 2014, balance sheet
4,716,000 Common Stock (471,600 x 10)
+ 846,800 Additional Paid-In Capital (400,000 + 240,000 + 66,000 + 140,800)
+9,722,400 Retained Earnings
- 266,000 Treasury Stock
= 15,019,200 Total Stockholders' Equity
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