13-5 The stockholders’ equity of Sayers Company at January 1, 2011, is as follow

Question

13-5
The stockholders’ equity of Sayers Company at January 1, 2011, is as follows:

Common stock—no-par value, stated value of $20; 100,000 shares authorized, 60,000 shares issued

$1,200,000

Paid-in capital in excess of stated value

200,000

Appropriation per loan agreement

75,200

Unappropriated retained earnings

424,000

Treasury stock (3,000 shares at cost)

(72,000)

During 2011, the following transactions occurred in the order listed:

  1.   Issued 10,000 shares of stock for $368,000.

  2.   Declared a 4% stock dividend when the market price was $48 per share.

  3.   Sold 1,000 shares of treasury stock for $43,200.

  4.   Issued stock certificates for the stock dividend declared in transaction 2.

  5.   Bought 2,000 shares of treasury stock for $67,200.

  6.   Increased the appropriation by $43,200 per loan agreement.

Required

Prepare journal entries as necessary for these transactions.

Common stock—no-par value, stated value of $20; 100,000 shares authorized, 60,000 shares issued

$1,200,000

Paid-in capital in excess of stated value

200,000

Appropriation per loan agreement

75,200

Unappropriated retained earnings

424,000

Treasury stock (3,000 shares at cost)

(72,000)

Explanation / Answer

Journal Entry Date Accounting titles & Explanations Debit Credit 1) cash 368,000 Comon stock (10000*20) 200000 Paid in capital in excess of stated value 168,000 2) Retained earnings (60000+10000-3000)*4%*48 128640 common stock div distributable (2680*20) 53600 paid in capital in excess of stated value 75040 3) Treasury stock 43,200 cash 43,200 4) Common stock dividend distributable 53,600 common stokc. 53,600 5) Treasury stock 67,200 cash 67,200 6) Appropirated retained earnings 43,200 Unappropirated retained earnings 43,200

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