Question: The Top Hat Inc is a chain of magic shops

The Top Hat, Inc., is a chain of magic shops that is organized as a corporation. During the month of June, the stockholders’ equity accounts of The Top Hat were affected by the following events:
June 3 The corporation sold 1,000 shares of capital stock at $20 per share.
June 10 The corporation declared a 25 cents per share dividend on its 20,000 shares of outstanding capital stock, payable on June 23.
June 23 The corporation paid the dividend declared on June 10.
June 30 The Income Summary account showed a credit balance of $60,000; the corporation’s accounts are closed monthly.

a. Prepare journal entries for each of the above events in the accounts of The Top Hat. Include the entries necessary to close the Income Summary and Dividends accounts.
b. Prepare a statement of retained earnings for June. Assume that the balance of retained earnings on May 31 was $520,000.

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  • CreatedApril 17, 2014
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