Question

Exercise 11-21 Cash dividends, treasury stock, and statement of retained earnings LO C3, P2, P3 Alexander Corporation reports the following components of stockholders' equity at December 31, 2018. Common stock-$25 par value, 60,000 shares authorized, 40,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $1,000,000 80,000 375,000 $1,455,000 During the year, the following transactions affected its stockholders' equity accounts. Jan. Jan. Feb. July Aug. Sept. 2 Purchased 4,000 shares of its own stock at $25 cash per share. 7 Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record. 28 Paid the dividend declared on January 7. 9 Sold 1,600 of its treasury shares at $30 cash per share. 27 Sold 2,000 of its treasury shares at $20 cash per share. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. 22 Paid the dividend declared on September 9. 31 closed the $62,000 credit balance (from net income) in the Income Summary account to Retained Earnings. Oct. Dec. Required: 1. Prepare journal entries to record each of these transactions. 2. Prepare a statement of retained earnings for the year ended December 31, 2019. 3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2019.

Answer 1

Requirement:1

Date	Description	Debit	Credit
Jan. 2	Treasury Stock	$       100,000
	Cash		$        100,000
	(To record Treasury Stock purchased)
Jan. 7	Cash Dividend	$         54,000
	Dividend Payable-Common Stock		$           54,000
	( To record dividend declared)
Feb. 28	Dividend Payable-Common Stock	$         54,000
	Cash		$           54,000
	( To record dividend paid)
July. 9	Cash	$         48,000
	Treasury Stock		$           40,000
	Paid-In Capital in excess - Treasury Stock		$             8,000
	(To record treasury stock resold)
Aug. 27	Cash	$         40,000
	Paid-In Capital in excess - Treasury Stock	$           8,000
	Retained Earning	$           2,000
	Treasury Stock		$           50,000
	(To record treasury stock resold)
Sept. 9	Cash Dividend [(40000-4000+1600+2000)*2]	$         79,200
	Dividend Payable-Common Stock		$           79,200
	( To record dividend declared)
Oct. 22	Dividend Payable-Common Stock	$         79,200
	Cash		$           79,200
	( To record dividend paid)
Dec. 31	Income Summary/Net Income	$         62,000
	Retained Earnings		$           62,000
	( To close income summary account)

Requirement:2

Alexander Corporation
Retained Earnings Statement
For the Year Ended December.31, 2019
Beginning Balance	$         375,000
Add:Net Income	$            62,000
Less:
Dividends (Cash Dividend)	$       (133,200)
Treasury Stock	$            (2,000)
Retained Earnings Closing Balance	$         301,800

Requirement:3

Alexander Corporation
[Stockholders` Equity Section]
For the Year Ended December.31, 2019
Stockholder's equity :
Common Stock	$      1,000,000
Paid-in capital in excess of par-common stock	$            80,000
Total paid in capital	$      1,080,000
Retained Earnings	$         301,800
Subtotal	$      1,381,800
Less: Treasury Stock [400*25]	$         (10,000)
Total stockholder's Equity	$      1,371,800