Question

Exercise 18-17 (Algo) Transactions affecting retained earnings [LO18-6, 18-7] Shown below in T-account format are the changes affecting the retained earnings of Brenner Jude Corporation during 2021. At January 1, 2021, the corporation had outstanding 108 million common shares, $1 par per share. Retained Earnings (5 in millions) Beginning balance Retirement of million common shares for 93 522 million 5 82 Net Income for the year 36 Declaration and payment of a 50.36 per share cash dividend Declaration and distribution of a 5 stock dividend 26 108 Ending balance Required: 1. From the information provided by the account changes, you should be able to recreate the transactions that affected Brenner-Jude's retained earnings during 2021. Prepare the journal entries that Brenner Jude must have recorded during the year for these transactions. (Hint: In lieu of revenues and expenses, use an account titled "Income summary" to close net income or net loss.) 2. Prepare a statement of retained earnings for Brenner Jude for the year ended 2021 Complete this question by entering your answers in the tabs below.

Answer 1

Journal entry worksheet ($in million Event General Journal Debit Credit 1 Common shock (8 million shares * $1 por peshave paid in capital- Excen ot par ($22 - $8-5) Retained Earnings Cash $ 22 (to record the retirement of common shares) TRU $82 2. Income Summary Rescũned Earnings $ 82 ve (to record net income)

3 $36 Retained Earnings Cash $36 (to record declaration of cash dividend) 4 Retained Earnings $26 Common shock $5 [(108-8)x5.1) at $1 per share in $ 21 paid in capital - Excenot + par (to record declaration of stock dividend)