Krisch Enterprises Inc. produces aeronautical navigation equipment. The stockholders' equity accounts of Krisch Enterprises Inc., with balances on January 1, 2010, are as follows:

The following selected transactions occurred during the year:

Jan. 6. Paid cash dividends of $0.40 per share on the common stock. The dividend had been properly recorded when declared on November 29 of the preceding fiscal year for $54,000.

Mar. 9. Sold all of the treasury stock for $1,350,000.

Apr. 3. Issued 50,000 shares of common stock for $1,700,000.

July 30. Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $36 per share.

Aug. 30. Issued the certificates for the dividend declared on July 30.

Nov. 7. Purchased 25,000 shares of treasury stock for $800,000.

Dec. 30. Declared a $0.45-per-share dividend on common stock.

31. Closed the credit balance of the income summary account, $400,000.

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.

Transcribed Image Text:

Common Stock, $20 stated value (250,000 shares authorized, 175,000 shares issued).... Paid-In Capital in Excess of Stated Value Retained Earnings... Treasury Stock (40,000 shares, at cost). $3,500,000 1,750,000 4,600,000 1,000,000 ... ....