Exercise 11-18 Cash dividends, treasury stock, and statement of retained earning
ID: 2585817 • 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, 60,80 shares authorized, 39,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 975,80e 78,008 371,000 $1,424,000 In year 2017, the following transactions affected its stockholders' equity accounts Jan. 2 Purchased 3,900 shares of its own stock at $25 cash per share dan. 7 Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockho1ders of record Feb. 28 Paid the dividend declared on January 7 July 9 Sold 1,568 of its treasury shares at $38 cash per share. Sepe. 2 sinectors delares pr share cash divddend parasle on octoer 22 to the seatenber 23 stocenalders of Sept. 9 Directors declared a 52 per share cash dividend peyable on October 22 to the September 23 stockholders of rcord. Oct. 22 Paid the dividend declared on September 9. Dec. 31 Closed the $61,008 credit balance (from net income) in the Income Summary account to Retained Earnings. Required: 1. Prepare journal entries to record each of these transoctions for 2017 2. Prepare a statement of retained earnings for the year ended December 31. 2017 3. Prepare the stockholders equity section of the compeny's balance sheet es of December 31, 2017 Complete this question by entering your answers in the tabs below.Explanation / Answer
1.
Note: On sale of 1950 treasury stock at $20, the difference of $9750 [1950 x ($25 - $20)] is debited to Paid-in capital-Treasury stock to the extent of balance available $7800. The remaining amount of $1950 ($9750 - $7800) is debited to the retained earnings.
2.
Date Account Titles and Explanation Debit Credit Jan. 2 Treasury stock (3900 x $25) 97500 Cash 97500 (To record purchase of treasury stock) Jan. 7 Retained earnings 52650 Dividend payable [$1.50 x (39000 - 3900)] 52650 (To record declaration of cash dividend) Feb. 28 Dividend payable 52650 Cash 52650 (To record payment of cash dividend) Jul. 9 Cash (1560 x $30) 46800 Treasury stock (1560 x $25) 39000 Paid-in capital-Treasury stock (1560 x $5) 7800 (To record sale of treasury stock) Aug. 27 Cash (1950 x $20) 39000 Paid-in capital-Treasury stock 7800 Retained earnings [(1950 x $5) - 7800] 1950 Treasury stock (1950 x $25) 48750 (To record sale of treasury stock) Sep. 9 Retained earnings 77220 Dividend payable [$2 x (39000-3900+1560+1950)] 77220 (To record declaration of cash dividend) Oct. 22 Dividend payable 77220 Cash 77220 (To record payment of cash dividend) Dec. 31 Income summary 61000 Retained earnings 61000 (To close net income to retained earnings)Related Questions
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