Reference no: EM131250426

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.