Stockholders' Equity: Transactions and StatementThe stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $10 par value, 300,000 shares authorized, 60,000 shares 600,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 960,000 From treasury stock 60,000 1,020,000 Retained earnings 696,000 2,316,000 Less: Treasury stock (6,000 shares) at cost 276,000 Total Stockholdersâ€™ Equity 2,040,000 The following transactions affecting stockholdersâ€™ equity occurred during the year: Jan. 8 Issued 15,000 shares of previously unissued common stock for $42 cash per share. Mar. 12 Sold all of the treasury shares for $56 cash per share. June 30 Declared a five percent stock dividend on all outstanding shares of common stock. The market value of the stock was $50 per share. July 10 Issued the stock dividend declared on June 30. Oct. 7 Acquired 2,500 shares of common stock as treasury stock at $52 cash per share. Dec. 18 Declared a cash dividend of $1.00 per outstanding common share, payable on January 9 to stockholders of record on December 31. Requireda. Prepare journal entries to record the foregoing transactions.b. Prepare a statement of stockholdersâ€™ equity. Net income for the year is $682,000.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 57E: Outstanding Stock Lars Corporation shows the following information in the stockholders equity...

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Stockholders' Equity: Transactions and Statement
The stockholders' equity section of Night Corporation's balance sheet at January 1 follows:

Common stock, $10 par value, 300,000 shares authorized, 60,000 shares		600,000
issued, 6,000 shares in treasury
Additional paid-in capital
In excess of par value	960,000
From treasury stock	60,000	1,020,000
Retained earnings		696,000
		2,316,000
Less: Treasury stock (6,000 shares) at cost		276,000
Total Stockholdersâ€™ Equity		2,040,000

The following transactions affecting stockholdersâ€™ equity occurred during the year:

Jan.	8	Issued 15,000 shares of previously unissued common stock for $42 cash per share.
Mar.	12	Sold all of the treasury shares for $56 cash per share.
June	30	Declared a five percent stock dividend on all outstanding shares of common stock. The market value of the stock was $50 per share.
July	10	Issued the stock dividend declared on June 30.
Oct.	7	Acquired 2,500 shares of common stock as treasury stock at $52 cash per share.
Dec.	18	Declared a cash dividend of $1.00 per outstanding common share, payable on January 9 to stockholders of record on December 31.

Required
a. Prepare journal entries to record the foregoing transactions.
b. Prepare a statement of stockholdersâ€™ equity. Net income for the year is $682,000.

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