The stockholders’ equity section of Nilsson Corporation’s balance sheet as of December 31, 2014 is as follows:
Common stock ($5 par 500,000 shares authorized,
275,000 issued and outstanding) $1,375,000
Paid in capital in excess of par 550,000
Total paid in capital $1,925,000
Unappropriated retained earnings $1,335,000
Appropriated retained earnings 500,000
Total retained earnings 1,835,000
Total stockholders’ equity $3,760,000
Nilsson Corporation had the following stockholders’ equity transactions during 2015:
Jan 15 Completed the building renovation, for which $500,000 of retained earnings had been restricted. Paid the contractor $485,0000, all of which is capitalized.
Mar 3 Issued 100,000 shares of the common stock for $8 per share
May 18 Declared a dividend of $1.50 per share to be paid on July 31, 2015, to stockholders of record on June 30, 2015
Jun 19 Approved additional building renovation to be funded internally. The estimated cost of the project is $400,000, and retained earnings are to be restricted for that amount.
Jul 31 Paid the dividend
Nov 12 Declared a property dividend to be paid December 31, 2015, to stockholders of record on
Nov 30, 2015. The dividend is to consist of 35,000 shares of Hampton Inc. stock that are currently recorded in Nilsson’s books at $9 per share. The fair market value of the stock on Nov 12 is $13 per share.
Dec 31 Reported $885,000 of net income on the Dec 31, 2015, income statement. (Assume that revenues and expenses were closed to a temporary account, income summary. Use this account to complete the closing process). In addition, the stock was distributed in satisfaction of the property dividend. The Hampton stock closed at $14 per share at the end of the day’s trading.
Instructions:
Make all necessary journal entries for Nilsson to account for the transactions affecting stockholders’ equity.
Prepare the December 31, 2015 Stockholders’ Equity section of the balance sheet for Nilsson.