Ruffalo Enterprises Inc. produces aeronautical navigation equipment. The stockholder’s equity accounts of Ruffalo Enterprises Inc. with balances on January 1, 2012, are as follows:
|
Common Stock $8 stated value (250,000 shares authorized, 175,000 shares issued) |
$1,400,000 |
|
Paid in Capital in Excess of Stated value |
700,000 |
|
Retained Earnings |
1,840,000 |
|
Treasury Stock (40,000 shares at cost) |
400,000 |
The following selected transactions occurred during the year:
|
Jan. 9. |
Paid cash dividends of $0.10 per share on the common stock. The dividend had been properly recorded when declared on November 30 of the preceding fiscal year for $13,500. |
|
Mar. 15. |
Sold all of the treasury stock for $540,000 |
|
May 13. |
Issued 50,000 shares of common stock for $680,000. |
|
June 14. |
Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $15 per share. |
|
July 16. |
Issued the certificates for the dividend declared on June 11. |
|
Oct. 30. |
Purchased 25,000 shares of treasury stock for $320,000. |
|
Dec. 30. |
Declare a $0.12 per share dividend on common stock. |
|
31. |
Closed the credit balance of the income summary account, $775,000 |
|
31. |
Closed the two dividends accounts to Retained Earnings. |
Instructions
1. Enter the January 1 balance in T accounts for the stockholder’s 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 the eight selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2012.
4. Prepare the stockholder’s Equity section of the December 31, 2012, balance sheet.
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