ruffalo enterprises inc produces aeronautical navigation equipment the stockholder s 458366

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:

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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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