Problem

Journalizing dividend and treasury stock transactions, preparing a statement of retained e...

Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders’ equity [30-45 min]

The balance sheet of Goldstein Management Consulting, Inc., at December 31, 2011, reported the following stockholders’ equity:

Paid-in capital:

   Common stock, $10 par, 200,000 shares authorized,15,000 shares issued .........................

$   150,000

   Paid-in capital in excess of par—common ..........................................................................

310,000

    Total paid-in capital ........................................................................................................

460,000

Retained earnings .................................................................................................................

162,000

Total stockholders’ equity ....................................................................................................

$   622,000

During 2012, Goldstein completed the following selected transactions:

Feb 6

Distributed a 5% stock dividend on the common stock. The market value of Goldstein’s stock was $21 per share.

Jul 29

Purchased 2,300 shares of treasury stock at $21 per share.

Nov27

Declared a $0.10 per share cash dividend on the 13,450 shares of common stock outstanding. The date of record is December 17, 2012, and the payment date is January 7, 2013.

Dec31

Closed the $81,000 net income to Retained earnings.

Requirements

1. Record the transactions in the general journal.


2. Prepare a retained earnings statement for the year ended December 31, 2012.


3. Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.

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