Accounting PR13-4A. Corporations, organizations, Stock transactions, and Dividends.?

Entries for selected corporate transaction Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Tolbert enterprises Inc., with balances on January 1, 2012 are as follows:

common stock, $10 stated value (600,000 shares authorized, 400,000 shares issued) -$4,000,000

Paid-In capital in Excess of Stated Value - $750,000

Retained Earnings - $ 9,150,000

Treasury stock (40,000 shares, at cost) - $600,000

The 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 $46,800

Apr 3. Issued $75,000 shares of comon stock for $1,200,000

June 6. Sold all of the treasury stock for $725,000

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 25,000 shares of treasury stock for $500,000

Dec 27. Declared a $0.16-per-share dividend on common stock

31. Closed the credit balance of the income summary account, $950,000

31. Closed the two dividends accounts to Retained Earnings

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

2) Journalize the entries to record the transactions, and post to the eight selected accounts.

3) prepare a retained earnings statement for the year ended December 31, 2012

4) Prepare the stockholders' Equity section of the December 31, 2012, balance sheet.

Update:

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  • JKRB
    Lv 7
    7 years ago
    Best Answer

    2) Journalize the entries to record the transactions, and post to the eight selected accounts.

    To begin with you need to know that there are 400,000 shares of common stock issued but, because of the Treasury Stock, only 360,000 shares outstanding. You only need to worry about the shares outstanding when calculating dividends.

    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 $46,800

    Dr Dividends Payable 46,800

    Cr Cash 46,800

    Apr 3. Issued $75,000 shares of comon stock for $1,200,000

    75,000 x $10 stated value = $750,000

    Dr Cash 1,200,000

    Cr Common Stock 750,000

    Cr Paid-In Capital in Excess of Stated Value 450,000

    *Note: There are now 360,000 + 75,000 = 435,000 shares outstanding.

    June 6. Sold all of the treasury stock for $725,000

    Dr Cash 725,000

    Cr Common Treasury Stock 600,000

    Cr Paid-In Capital From Sale of Treasury Stock 125,000

    *There are now 435,000 + 40,000 = 475,000 shares outstanding

    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.

    475,000 x 4% x $18 = $342,000 stock dividend

    475,000 x 4% x $10 stated value = $190,000 stock dividend distributable

    Dr Stock Dividends 342,000

    Cr Stock Dividends Distributable 190,000

    Cr Paid-In Capital in Excess of Stated Value 152,000

    Aug 15. Issued the certificates for the dividend declared on July 1.

    Dr Stock Dividends Distributable 190,000

    Cr Common Stock 190,000

    *There are now 475,000 x 1.04 = 494,000 shares outstanding

    Nov 10. Purchased 25,000 shares of treasury stock for $500,000

    Dr Treasury Stock 500,000

    Cr Cash 500,000

    *There are now 494,000 - 25,000 = 469,000 shares outstanding

    Dec 27. Declared a $0.16-per-share dividend on common stock

    469,000 x 0.16 = $75,040 dividend

    Dr Cash Dividends 75,040

    Cr Dividends Payable 75,040

    31. Closed the credit balance of the income summary account, $950,000

    Dr Income Summary 950,000

    Cr Retained Earnings 950,000

    31. Closed the two dividends accounts to Retained Earnings

    Dr Retained Earnings 417,040

    Cr Stock Dividends 342,000

    Cr Cash Dividends 75,040

    3) prepare a retained earnings statement for the year ended December 31, 2012

    Retained earnings (beginning balance) . . . . . . . . . . . $, 9,150,000

    Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 950,000

    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,100,000

    Less: Cash dividends . . . . . . . . . . . . . .$. 75,040

    . . . . .Stock dividends . . . . . . . . . . . . . . 342,000 . . . . .. 417,040

    Retained earnings (ending balance) . . . . . . . . . . . . . $ .9,682.960

    4) Prepare the stockholders' Equity section of the December 31, 2012, balance sheet.

    Paid-in capital

    Common stock, $10 stated value

    (600,000 shares authorized, 494,000 shares issued) . . . . . . . . . . . $4,940,000

    Additional paid-in capital

    Paid-in capital in excess of stated value . . . . . . . . . . . $1,352,000

    Paid-in capital from sale of treasury stock . . . . . . . . . . . . 125,000 . .1,477,000

    Total paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,417,000

    Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,682.960

    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16,099,960

    Less: Treasury stock (25,000 shares at cost) . . . . . . . . . . . . . . . . . . . 500,000

    Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,599,960

    Source(s): Accounting Fan
  • Anonymous
    3 years ago

    1

    Source(s): Make Money Investing in Stocks http://teres.info/TheTradingCode
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