Alexander Corporation reports the following components of stockholders’ equity o

Question

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2015:

In year 2016, the following transactions affected its stockholders’ equity accounts.

Purchased 3,600 shares of its own stock at $25 cash per share.

Directors declared a $1.50 per share cash dividend payable on Feb. 28 to the Feb. 9 stockholders of record.

Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record.

Closed the $58,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Prepare journal entries to record each of these transactions for 2016.

Prepare a statement of retained earnings for the year ended December 31, 2016. (Amounts to be deducted should be indicated by a minus sign.)

Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2016. (Amounts to be deducted should be indicated by a minus sign.)

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2015:

Explanation / Answer

Date Accounts Title Dr Cr 2-Jan Treasury Stock 90000 Cash (3600*25) 90000 7-Jan Cash Dividend 48600 Dividend Payable (36000-3600)*1.5 48600 28-Feb Dividend Payable 48600 Cash 48600 9-Jul Cash 43200 Paid in capital in excess-Treasury stock 7200 Treasury Stock (1440*25) 36000 27-Aug Cash (1800*20) 36000 Paid in capital in excess-Treasury stock 7200 Retained Earnings 1800 Treasury Stock (1800*25) 45000 9-Sep Cash Dividend 71280 Dividend Payable (36000-3600+1440+1800)*2 71280 22-Oct Dividend Payable 71280 Cash 71280 31-Dec Income summary 58000 Retained Earnings 58000 Retained Earnings 119880 Cash Dividend 119880 (48600+71280) ans 2 Statement of Retained Earnings Opening balance 361000 Add: Net Income 58000 419000 less: cash dividend -119880 Treasury stock -1800 Ending Balance 297320 ans 3 Stockholder Equity ommon stock—$25 par value, 60,000 shares authorized, $ 900,000     36,000 shares issued and outstanding   Paid-in capital in excess of par value, common stock 72,000   Retained earnings 297,320 Less: Teasury stock (3600-1440-1800)*25 -9000   Total stockholders’ equity 1,260,320

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