Kroll Corporation reports the following components of stockholders’ equity on December 31, 2011.
Common stock—$25 par value, 40,000 shares authorized, 30,000 shares issued and outstanding | $ 750,000 |
Paid-in capital in excess of par value, common stock | 50,000 |
Retained earnings | . 260,000 |
Total stockholders’ equity | $1,060,000 |
In year 2012, the following transactions affected its stockholders’ equity accounts. | ||
Jan. | 2 | Purchased 2,000 shares of its own stock at $25 cash per share. |
Jan. | 7 | Directors declared a $2 per share cash dividend payable on Feb. 28 to the Feb. 9 stockholders of record. |
Feb | 28 | Paid the dividend declared on January 7. |
July | 9 | Sold 500 of its treasury shares at $30 cash per share. |
Aug. | 27 | Sold 1,500 of its treasury shares at $23 cash per share. |
Sep | 9 | Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. |
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Oct. | 22 | Paid the dividend declared on September 9. |
Dec. | 31 | Closed the $8,000 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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