Making the stockholders equity section


The balance sheet of Mundo Foods, at December 31, 2011, reported 90,000 shares of no-par common stock authorized with 50,000 shares issued and a common stock balance of $170,000. Retained Earnings had a balance $140,000. During 2012 the company completed the following selected transactions:

March 15 - Purchased 9,000 shares of treasury stock at $7 per share.

April 30 - Distributed a 10% stock dividend on the outstanding shares of common stock. The market value of common stock was $10 per share.

Dec 31 - Earned net income of $105,000 during the year. Closed net income to Retained Earnings.

Requirements:

1. Record the transactions in the general journal. Explanations are not required.

2. Prepare the stockholders' equity section of Mundo Health Food's balance sheet at December 31, 2012.

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Accounting Basics: Making the stockholders equity section
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