Context Corporation reports the following components of stockholders’ equity on December 31, 2011.
Common stock—$10 par value, 50,000 shares authorized, 20,000 shares issued and outstanding | $200,000 |
Paid-in capital in excess of par value, common stock | 30,000 |
Retained earning | 135,000 |
Total stockholders’ equity | $365,000 |
In year 2012, the following transactions affected its stockholders’ equity accounts. | ||
Jan. | 1 | Purchased 2,000 shares of its own stock at $20 cash per share. |
Jan.5 | Directors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. | |
Feb. | 28 | Paid the dividend declared on January 5. |
July | 6 | Sold 750 of its treasury shares at $24 cash per share. |
Aug. | 22 | Sold 1,250 of its treasury shares at $17 cash per share. |
Sept.5 | Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record. | |
Oct. | 28 | Paid the dividend declared on September 5. |
Dec.31 | Closed the $194,000 credit balance (from net income) in the Income Summary account to Retained Earnings. | |
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Required
1.Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2012.
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