Exercise 11-18 Cash dividends, treasury stock, and statement of retained earning
ID: 2592357 • Letter: E
Question
Exercise 11-18 Cash dividends, treasury stock, and statement of retained earnings LO C3, P2, P3 Alexander Corporation reports the following components of stockholders' equity on December 31, 2016: Common stock-$25 par value, 60,eee shares authorized, 4e,000 shares issued and outstanding Paid-in capital in excess of par value, comón stock Retained earnings Total stockholders' equity 80,e00 800 $1,455,e0e ook int In year 2017, the following transactions affected its stockholders equity accounts Jan. 2 Purchased 4,eee shares of its own stock at $25 cash per share. Jan. 7 Directors declared a $1.se per share cash dividend payable on February 28 to the February hâtockholders of record. Feb 28 Paid the dividend declared on January7 July 9 sold 1,see of its treasury shares at s3e cash per share. Aug. 27 Sold 2,ee0 of its treasury shares at 520 cash per share, sk int o pirectors declared a S2 per share cash dividend payable on october 22 to the septenber 23 stockholders of record. Oct. 22 Paid the dividend declared on Septenber 9. Dec, 31 closed the 562,00e credit balance (from net income) in the Income Sunary account to Reta Required 1. Prepare journal entries to record each of these transactions for 2017 2. Prepare a statement of retalned earnings for the year ended December 31, 2017 3. Prepare the stockholders' eauity section of the company's balance sheet as of December 31, 2017 Complete this question by entering your answers in the tabs below. Required 1Required 2 RequiredExplanation / Answer
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Note: On sale of 2000 treasury stock at $20, the difference of $10000 [2000 x ($25 - $20)] is debited to Paid-in capital-Treasury stock to the extent of balance available $8000. The remaining amount of $2000 ($10000 - $8000) is debited to the retained earnings.
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Date Account Titles and Explanation Debit Credit Jan. 2 Treasury stock (4000 x $25) 100000 Cash 100000 (To record purchase of treasury stock) Jan. 7 Retained earnings 54000 Dividend payable [$1.50 x (40000 - 4000)] 54000 (To record declaration of cash dividend) Feb. 28 Dividend payable 54000 Cash 54000 (To record payment of cash dividend) Jul. 9 Cash (1600 x $30) 48000 Treasury stock (1600 x $25) 40000 Paid-in capital-Treasury stock (1600 x $5) 8000 (To record sale of treasury stock) Aug. 27 Cash (2000 x $20) 40000 Paid-in capital-Treasury stock 8000 Retained earnings [(2000 x $5) - 8000] 2000 Treasury stock (2000 x $25) 50000 (To record sale of treasury stock) Sep. 9 Retained earnings 79200 Dividend payable [$2 x (40000-4000+1600+2000)] 79200 (To record declaration of cash dividend) Oct. 22 Dividend payable 79200 Cash 79200 (To record payment of cash dividend) Dec. 31 Income summary 62000 Retained earnings 62000 (To close net income to retained earnings)Related Questions
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