Ivy Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Ivy Enterprises Inc., with balances on January 1, 2010, are as follows:
AND SO ON
The following selected transactions occurred during the year:
Jan. 7. Paid cash dividends of $0.18 per share on the common stock. The dividend had been properly recorded when declared on November 30 of the preceding fiscal year for $66,600.
Feb. 9. Issued 50,000 shares of common stock for $600,000
May 21. Sold all of the treasury stock for $300,000
July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $13 per share.
Aug. 15. Issued the certificates for the dividend declared on July 1
Sept. 30. Purchased 10,000 shares of treasury stock for $100,000
Dec. 27. Declared a $0.20-per-share dividend on common stock.
31. Closed the credit balance of the income summary account, $485,000.
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, 2010.
4. Prepare the Stockholders’ Equity section of the December 31, 2010, balance sheet.
Check: Total stockholders’ equity $ 11,853,400
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