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Amerspec Enterprise Inc.

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Amerspec Enterprise Inc. produces aeronautical navigation equipment. The stockholders' equity accounts of Amerspec Enterprises Inc., with balances on January 1, 2006, are as follows;

Common Stock, $10 stated value (100,000 shares authorized,

60,000 shares issued) ............................................................ $600,000

Paid-in Capital in Excess of Stated Value ................................... 150,000

Retained Earnings ............................................................... 497,750

Treasury Stock (7,500 shares, at cost) ....................................... 120,000

The following selected transactions occurred during the year:

Jan. 19. Paid cash dividends of $0.60 per share on the common stock. The dividends had been properly recorded when declared on December 28 of the preceding year for $31,500.

Feb. 2. Sold all of the treasury stock for $150,000.

Mar. 15. Issued 20,000 shares of common stock for $480,000.

July. 30. Declared a 2% stock dividend on common stock, to be capitalized at the market
Price of the stock, which is $25 a share.

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

Oct. 10. Purchased 5,000 shares of treasury stock for $105,000.

Dec. 30. Declared a $0.50-per-share dividend on common stock

31. Closed the credit balance of the income summary account, $182,500.

31. Closed the two dividends accounts to Retained Earnings.

Required:
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, 2006.
4.Prepare the stockholders' equity section of the December 31, 2006 balance sheet.

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Solution Summary

This solution is comprised of a detailed explanation to 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, journalize the entries to record the transactions, and post to the eight selected accounts, prepare a retained earnings statement for the year ended December 31, 2006, and prepare the stockholders' equity section of the December 31, 2006 balance sheet.

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Amerspec Enterprise Inc. produces aeronautical navigation equipment. The stockholders' equity accounts of Amerspec Enterprises Inc., with balances on January 1, 2006, are as follows;

Common Stock, $10 stated value (100,000 shares authorized,

60,000 shares issued) ............................................................ $600,000

Paid-in Capital in Excess of Stated Value ................................... 150,000

Retained Earnings ............................................................... 497,750

Treasury Stock (7,500 shares, at cost) ....................................... 120,000

The following selected transactions occurred during the year:

Jan. 19. Paid cash dividends of $0.60 per share on the common stock. The dividends had been properly recorded when declared on December 28 of the preceding year for $31,500.

Feb. 2. Sold all of the treasury stock for $150,000.

Mar. 15. Issued 20,000 shares of common stock for $480,000.

July. 30. Declared a 2% stock dividend on common stock, to be capitalized at ...

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