Reference no: EM132683492

Problem - Entries for selected corporate transactions

Ruffalo Enterprises Inc. produces aeronautical navigation equipment. The stockholders' 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 14.

Oct. 30. Purchased 25,000 shares of treasury stock for $320,000.

Dec. 30. Declared a $0.12-per-share dividend on common stock.

Dec. 31. Closed the credit balance of the income summary account, $775,000.

Dec. 31. Closed the two dividends accounts to Retained Earnings.

Instructions -

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.