Question

Shown below in T-account format are the changes affecting the retained earnings of Forge Corporation during 2018. At January 1 2018, the corporation had outstanding 105 million common shares, $1 par per share. Retained Earnings ( in millions) 107 , Beginning balance Retirement of 5 million common shares for $36 million 96 Net income for the year Declaration and payment of a 39 $e.39 per share cash dividend Declaration and distribution of a 21 4% stock dividend 138 Ending balance Required: 1. From the information provided by the account changes you should be able to recreate the transactions that affected Forge's nces retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions. 2. Prepare a statement of retained earnings for Forge for the year ended 2018 Complete this question by entering your answers in the tabs below. Required 1 Required 2 From the information provided by the account changes you should be able to recreate the transactions that affected Forge's retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e 10,000,000 should be entered as 10).) Show less View transaction list Journal entry worksheet Record the retirement of common shares Note: Enter debits before credits Prey3 of 4 E Next

Answer 1

Statement of Retained Earnings for Forge for the year ended 2018 (S in millions) Opening Balance of Retained Earnings Add: Net Income for the year Less: 2 $ 107 $ 96 Loss on retirement of shares Cash dividend Stock dividend Closing balance of Retained Earnings 39 $ 21 $ 138