Question

Alexander Corporation reports the following components of stockholders' equity at December 31, 2018. Common stock-$25 par value, 70,000 shares authorized, 43,000 shares issued and outstanding Paid-in capital in excess of par value, common stock Retained earnings Total stockholders' equity $1,075,000 86,000 385,000 $1,546,000 During the year, the following transactions affected its stockholders' equity accounts. 7 D Jan. . Jan. 2 Purchased 4,300 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. Feb. 28 Paid the dividend declared on January 7. July 9 Sold 1,720 of its treasury shares at $30 cash per share. Aug. 27 Sold 2,150 of its treasury shares at $20 cash per share. Sept. 9 Directors declared a $2 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 $65,000 credit balance (from net income) in the Income Summary account to Retained Earnings. 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.
Asked this previously and the numbers were wrong.

Answer 1

Solution 1:

Alexander Corporation - Journal Entries
Date	Particulars	Debit	Credit
2-Jan	Treasury Stock A/c Dr	$107,500.00
	To Cash		$107,500.00
	(Being 4300 shares of treasury stock purchased at $25 per share)
7-Jan	Retained Earnings Dr	$58,050.00
	To Dividend payable [(43000 - 4300)*1.50]		$58,050.00
	(Being dividend declared)
28-Feb	Dividend Payable Dr	$58,050.00
	To Cash		$58,050.00
	(Being dividend paid)
9-Jul	Cash A/c Dr (1720*30)	$51,600.00
	To Treasury Stock (1720*25)		$43,000.00
	To Additional Paid in Capital (1720*$5)		$8,600.00
	(Being 1720 shares of treasury stock sold at $30 per share)
27-Aug	Cash A/c Dr (2150*20)	$43,000.00
	Additional Paid in Capital A/c Dr	$8,600.00
	Retained Earnings Dr (Balancing figure)	$2,150.00
	To Treasury Stock (2150*$25)		$53,750.00
	(Being 2150 shares of treasury stock sold at $20 per share)
9-Sep	Retained Earnings Dr	$85,140.00
	To Dividend payable [(43000 - 430)*2]		$85,140.00
	(Being dividend declared)
22-Oct	Dividend Payable Dr	$85,140.00
	To Cash		$85,140.00
	(Being dividend paid)
31-Dec	Income summary Dr	$65,000.00
	To Retained Earnings		$65,000.00
	(Being income transferred to retained earnings)

Solution 2:

Alexander Corporation - Statement of Retained Earnings on 31.12.2019
Particulars	Amount
Opening balance	$385,000.00
Add: Income for 2018	$65,000.00
	$450,000.00
Less: Dividend Paid ($58,050 + $85,140)	$143,190.00
Less: Loss on sale of treasury stock	$2,150.00
Ending balance of Retained Earnings	$304,660.00

Solution 3:

Stockholder Equity Section of Balance sheet
Alexander Corporation at December 31, 2017
Particulars	Amount
Stockholders Equity:
Common stock—$25 par value, 70,000 shares authorized, 43,000 shares issued and outstanding	$1,075,000.00
Paid-in capital in excess of par value, common stock	$86,000.00
Total contributed Capital	$1,161,000.00
Retained Earnings	$304,660.00
Treasury stock (430*$25)	-$10,750.00
Total Stockholder's Equity	$1,454,910.00