Problem #3 — Entries for selected corporate transactions
Bath â€˜n More Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Bath â€˜n More 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 common 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.