Page 8 13. Alexander Corporation reports the following components of stockholder

Question

Page 8 13. Alexander Corporation reports the following components of stockholders' equity on December 31, 2015: Common stock-$25 par value, 60,000 shares authorized, 36,000 shares issued and outstanding $ 900,000 Paid-in capital in excess of par value, common stock 72,000 Retained earnings 361,000 Total stockholders' equity $1,333,000 In year 2016, the following transactions affected its stockholders equity accounts: Jan. 2 Purchased 3,600 shares of its own stock at $25 cash per share. Jan. 7 Directors declared a $1.50 per share cash dividend payable on Feb. 28 to the Feb. 9 stockholders of record. Feb. 28 Paid the dividend declared on January 7. July 9 Sold 1,440 of its treasury shares at $30 cash per share. Aug. 27 Sold 1,800 of its treasury shares at $20 cash per share. Sept. 9 Directors declared a $2 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 $58,000 credit balance (from net income) in the Income Summary account to Retained Earnings. a. (8 points) Prepare journal entries to record each of these transactions for 2016. Date Account Debit Credit

Explanation / Answer

Date Account Debit Credit 2-Jan Treasury stock (3,600*25) 90000 Cash 90,000 7-Jan Retained earnings 84600 Dividends payable (60,000-3600)*1.5 84,600 28-Feb Dividends payable 84,600 cash 84,600 9-Jul Cash (1440*30) 43200 Treasury stock (1440*25) 36000 paid in capital in excess of par (1,440*5) 7200 27-Aug Cash (1800*20) 36,000 paid in capital in excess of par 7,200 Retained earnings 1,800 Treasury stock (1800*25) 45000 9-Sep Retained earnings 119280 Divdiends payable 119,280 (60000-3600+1440+1800)*2 22-Oct Dividends payable 119,280 cash 119,280 31-Dec income summary 58,000 retained earning s 58,000 Statement of Retained earnings opening balance of retained earnings 361,000 Add:Net income 58,000 419,000 less:Cash dividend 203880         Treasury stock 1,800 -205680 Closing balance of retained earnings 213,320 a. Date of declaration - is the date on which dividend is declared b. Date of record - is the date on which shareholders on record are considered                                for dividend c. date of payment - is the date on which the dividend is paid

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