Alexander Corporation reports the following components of stockholders’ equity at December 31, 2018, Common stock-$25 par…
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Question “Alexander Corporation reports the following components of stockholders’ equity at December 31, 2018, Common stock-$25 par…”
Alexander Corporation reports the following components of stockholders’ equity at December 31, 2018, Common stock-$25 par value, 60,000 shares authorized, 40,e00 shares issued and outstanding Paid-in capital in excess of par value, comnon stock Retained earnings Total stockholders equity $1,eee/088 ৪৪, ৪88 375,000 $1,455,eee During the year, the following transactions affected its stockholders’ equity accounts. Dan. /2 Púrchased 4,eee shares of its own stock at $25 cash per share. 7 Directors declared a $1.5e per share cash dividend payable on February 28 to the February 9 stockholders of record. 28 Paid the dividend declared on January 7. 9 5old 1,60e of its treasury shares at $30 cash per share. Jan. Feb, July Aug. 27 Sld 2,a8e of its treasury shares at $20 cash per share. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. 22 Pasd theidfvidend declared on September 9. 31 Closed the $62,eee credit balance (from net icone) in the Income Summary account to Retained Earnings. Sept. Oct. Dec. Required: 1. Prepare journal entries to record each of these 2. Prepare a statement of retained earnings fof the year ended December 31, 2019 3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2019. transactions.
Answer
Solution 1
Alexander Corporation Journal Entries | |||
Date | Particulars | Debit | Credit |
2-Jan | Treasury Stock A/c Dr | $100,000.00 | |
Cash | $100,000.00 | ||
(Being 4000 shares treasury stock bought at $25 per share | |||
7-Jan | Retained Earnings Dr | $54,000.00 | |
To Dividend payable ((40000 – 4000)*1.50] | $54,000.00 | ||
(Being dividend declared) | |||
28-Feb | Dividend-payable Dr | $54,000.00 | |
Cash | $54,000.00 | ||
(Being dividend paid) | |||
9-Jul | Cash A/c Dr (1600*30). | $48,000.00 | |
To Treasury Stock (1600*25). | $40,000.00 | ||
To Additional Paid In Capital (1600*$5) | $8,000.00 | ||
(Being 1600 shares treasury stock, sold at $30/share) | |||
27-Aug | Cash A/c Dr. (2000*20). | $40,000.00 | |
Additional Paid-in Capital A/c Dr | $8,000.00 | ||
Retained Earnings Dr. (Balancing figure). | $2,000.00 | ||
To Treasury Stock (2000*$25). | $50,000.00 | ||
(Being 2150 shares treasury stock purchased at $20 per share | |||
9-Sep | Retained Earnings Dr | $79,200.00 | |
Dividend payable [(40000-400)*2] | $79,200.00 | ||
(Being dividend declared) | |||
22-Oct | Dividend-payable Dr | $79,200.00 | |
Cash | $79,200.00 | ||
(Being dividend paid) | |||
31-Dec | Summary of income Dr | $62,000.00 | |
To Retained Earnings | $62,000.00 | ||
(Retained earnings are income that is transferred to income). |
Solution 2
Alexander Corporation Statement of Retained Earnings 31.12.2019 | |
Particulars | Amount |
Opening balance | $375,000.00 |
Add: 2019 Income | $62,000.00 |
$437,000.00 | |
Less: Dividend Paid ($54,000 + $79,200) | $133,200.00 |
Weaker: Loss on the sale of Treasury stock | $2,000.00 |
Ending balance of Retained Earnings | $301,800.00 |
Solution 3:
Stockholder Equity Section of Balance sheet | |
Alexander Corporation at December 31, 2019 | |
Particulars | Amount |
Stockholders Equity: | |
Common stock–$25 par value, 60,000 shares authorized, There are 40,000 shares outstanding and 40,000 shares were issued | $1,000,000.00 |
Common stock, paid-in capital exceeding par value | $80,000.00 |
Total contributed Capital | $1,080,000.00 |
Retained earnings | $301,800.00 |
Treasury stock (400*$25 | -$10,000.00 |
Total Stockholder’s Equity | $1,371,800.00 |
Conclusion
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