Alexander Corporation reports the following components of stockholders\' equity

Question

Alexander Corporation reports the following components of stockholders' equity on December 31.2015: 30.000 shirei issued and outsta Paid-in capital in excess of par value, common stock Retained earnings Total stockholders'equity $ 7S0.000 SO.OOO 340.000 $1.140,000 In year 20I6, the following transactions affected its stockholders' equity accounts. Jan. 2 Purchased 3,000 shares of its own stock at S25 cash per share. Jan. 7 Directors declared a S1.50 per share cash dividend payable on Feb. 28 to the Feb. 9 stockhold-ers of record. Feb. 28 Paid the dividend declared on January 7 July 9 Sold 1.200 of its treasury shares at $30 cash per share. Aug. 27 Sold 1.500 of its treasury shares at $20 cash pci share. Sept. 9 Directors declared a S2 per share cash dividend payable on October 22 to the September 23 stockholders of record. Oct. 22 Paid the dividend declared on September 9. Dec. 31 Closed the $52,000 credit balance (from net income) in the Income Summary account to Retained Earnings. Required Prepare journal entries to record each of these transactions for 2016. Prepare a statement of retained earnings for the year ended December 31.2016. Prepare the stockholders' equity section of the company's balance sheet as of December 31.2016.

Explanation / Answer

1.JOURNAL ENTRIES OF TRANSACTIONS FOR 2016

DATE PARTICULARS DEBIT($) CREDIT($) JAN 2 COMMON STOCK A/C DR 75,000 TO CASH A/C 75,000 (BEING 3,000 SHARES OF OWN STOCK PURCHASED AT $25 EACH) JAN 7 DIVIDEND A/C DR 45,000 TO DIVIDEND PAYABLE A/C 45,000 (BEING DIVIDEND DECLARED @$1.5 PER 30,000 SHARES) FEB 28 DIVIDEND PAYABLE A/C DR 45,000 TO CASH A/C 45,000 (BEING DIVIDEND PAID) JULY 9 CASH A/C DR 36,000 TO TREASURY SHARES A/C 36,000 (BEING 1,200 TREASURY SHARES SOLD @ $30) AUG 27 CASH A/C DR 30,000 TO TREASURY SHARES A/C 30,000 (BEING 1,500 TREASURY SHARES SOLD @$20) SEP 9 DIVIDEND A/C DR 54,000 TO DIVIDEND PAYABLE A/C 54,000 (BEING DIVIDEND DECLARED @$2 PER 27,000 SHARES) OCT 22 DIVIDEND PAYABLE A/C DR 54,000 TO CASH A/C 54,000 (BEING DIVIDEND PAID) DEC 31 INCOME SUMMARY A/C DR 52,000 TO RETAINED EARNINGS A/C 52,000 (BEING $52,000 CREDIT BALANCE IN INCOME SUMMARY ACCOUNT TRANSFERRED TO RETAINED EARNINGS ACCOUNT)

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