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Hiland Travel Company

3. The balance sheet of Hiland Travel Company at December 31, 2006, reported 100,000 shares of no-par common stock authorized, with 30,000 shares issued and a Common Stock balance of $180,000. Retained Earnings had a balance of $141,500. During 2007, the Company completed the following transactions:

Feb 20
? Purchased 4,000 shares of the Company's own common stock for the treasury at $5 per share.

Apr 30
? Distributed a 20% stock dividend on the 26,000 shares of outstanding common stock. The market value of Hiland Travel common stock was $10 per share.

July 1
? issued $500,000 face value, 10%, 10-year bonds for $463,000, resulting in a yield rate of 12%.

Sep 16
? Sold 2,800 shares of treasury stock for $12 per share.

Dec 19
? Split the no-par common stock 2 for 1 by issuing two new no-par shares for each old no-par share previously issued. Prior to the split, the Company had issued 35,200 shares.

Dec 31
? Earned net income of $117,000 during the year. Closed net income to Retained Earnings.

Directions:

1. Record the transactions in the general journal. Explanations are not required.
2. Prepare the stockholders' equity section of Hiland Travel's balance sheet at December 31, 2007.

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3. The balance sheet of Hiland Travel Company at December 31, 2006, reported 100,000 shares of no-par common stock authorized, with 30,000 shares issued and a Common Stock balance of $180,000. Retained Earnings had a balance of $141,500. During 2007, the Company completed the following transactions:

Feb 20
? Purchased 4,000 shares of the Company's own common stock for the treasury at $5 per share.

The treasury stock is recorded in a separate treasury stock account. The total amount is 4,000X5 = $20,000. The entry is
Feb 20 Treasury Stock Dr 20,000
Cash Cr 20,000

Apr 30
? Distributed a 20% stock dividend on the 26,000 shares of outstanding common stock. The market value of Hiland Travel common stock ...

Solution Summary

The solution explains how to record the transactions in a journal and prepare the stockholders equity section of the balance sheet

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