Shown below in T-account format are the changes affecting the retained earnings

Question

Shown below in T-account format are the changes affecting the retained earnings of Forge Corporation during 2018. At January 1, 2018, the corporation had outstanding 107 milion common shares, $1 par per share. Retained Barnings ($ in mi11ions) 92 Beginning balance Retirenent of 7 million common shares for $21 million 81 Net income for the year Declaration and payment of a 35 $0.35 per share cash dividend Declaration and distribution of a 24 4 stock dividend 110 Ending balance Required: 1. From the information provided by the account changes you should be able to recreate the transactions that affected Forge's retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions 2. Prepare a statement of retained earnings for Forge for the year ended 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 From the information provided by the account changes you should be able to recreate the transactions that affected Forge's retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions. (f no entry is required for a transaction/event, select No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Show lesSA View

Explanation / Answer

FORGE CORPORATION 1. To record retirement of common stock Account Title Debit Credit Common Stock 7 Additional Paid-in-capital - Common stock 10 Retained Earnings 4 Treasry Stock 21 2. To record declaration of cash dividend @$0.35 per share for 100 million shares Account Title Debit Credit Retained Earnings 35 Dividend Payable 35 Dividend Payable 35 Cash 35 3. To record declaration and distribution of 4% stock dividend Account Title Debit Credit Retained Earnings 24 Stock dividend distributable 24 Stock dividend distributable 24 Common Stock 4 Additional paid-in-capital - Common Stock 20 3. To record net income for the year Account Title Debit Credit Income Summary 81 Retained Earnings 81 FORGE CORPORATION Statement of retained earnings for the year ended December 31, 2018 Balance at January 1 92 Net income for the year 81 Deductions: Retirement of common stock -4 Cash Dividend -35 Stock Dividend -24 Balance as at December 31 110

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.