Reference no: EM132683474

Problem - Entries for Selected Corporate Transactions

Tolbert Enterprises Inc. manufactures bathroom fixtures. The stockholders' equity accounts of Tolbert Enterprises 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.

Dec. 31. Closed the credit balance of the income summary account, $950,000.

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.