Question

Check my wo 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 points Common stock-$25 par value, 60,000 shares authorized, 36,000 shares issued and outstanding Paid in capital in excess of par value, common stock Retained earnings Total stockholders' equity $ 900,000 22. 361,000 $1.333.000 eBook In year 2017, the following transactions affected its stockholders' equity accounts Jan. 2 Purchased 3,000 shares of its own stock at 525 cash por share. Jan 7 olrectors declared $1.50 per share cash dividend payable on February 20 to the rebruary 9 stockholders of record. Feb. 28 Pold the dividend declared on January 7. July Sold 1, 40 of its treasury shares at 530 cash per share Aug 27 sold 3,000 of its treasury shares at 320 cash per share.. Sept. Directors declared 52 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 558,000 credit balance (front income in the Income Summary account to Retained Earnings References Required: 1. Prepare journal entries to record each of these transactions for 2017 2. Prepare a statement of retained earnings for the year ended December 31, 2017 3. Prepare the stockholders' equity section of the company's balance sheet as of December 31 2017

Answer 1

Solution 1:

Alexander Corporation - Journal Entries
Date	Particulars	Debit	Credit
2-Jan	Treasury Stock A/c Dr	$90,000.00
	To Cash		$90,000.00
	(Being 3600 shares of treasury stock purchased at $25 per share)
7-Jan	Retained Earnings Dr	$48,600.00
	To Dividend payable [(36000 - 3600)*1.50]		$48,600.00
	(Being dividend declared)
28-Feb	Dividend Payable Dr	$48,600.00
	To Cash		$48,600.00
	(Being dividend paid)
9-Jul	Cash A/c Dr (1440*30)	$43,200.00
	To Treasury Stock (1440*25)		$36,000.00
	To Additional Paid in Capital (1440*$5)		$7,200.00
	(Being 1440 shares of treasury stock sold at $30 per share)
27-Aug	Cash A/c Dr (1800*20)	$36,000.00
	Additional Paid in Capital A/c Dr	$7,200.00
	Retained Earnings Dr (Balancing figure)	$1,800.00
	To Treasury Stock (1800*$25)		$45,000.00
	(Being 2812 shares of treasury stock sold at $22 per share)
9-Sep	Retained Earnings Dr	$71,280.00
	To Dividend payable [(36000 - 360)*2]		$71,280.00
	(Being dividend declared)
22-Oct	Dividend Payable Dr	$71,280.00
	To Cash		$71,280.00
	(Being dividend paid)
31-Dec	Income summary Dr	$58,000.00
	To Retained Earnings		$58,000.00
	(Being income transferred to retained earnings)

Solution 2:

Alexander Corporation - Statement of Retained Earnings on 31.12.2017
Particulars	Amount
Opening balance	$361,000.00
Add: Income for 2018	$58,000.00
	$419,000.00
Less: Dividend Paid ($48,600 + $71,280)	$119,880.00
Less: Loss on sale of treasury stock	$1,800.00
Ending balance of Retained Earnings	$297,320.00

Solution 3:

Stockholder Equity Section of Balance sheet
Alexander Corporation at December 31, 2017
Particulars	Amount
Stockholders Equity:
Common stock—$25 par value, 60,000 shares authorized, 36,000 shares issued and outstanding	$900,000.00
Paid-in capital in excess of par value, common stock	$72,000.00
Total contributed Capital	$972,000.00
Retained Earnings	$297,320.00
Treasury stock (360*$25)	-$9,000.00
Total Stockholder's Equity	$1,260,320.00