Problem - In year 2016, the following transactions affected its stockholders' equity accounts.
Jan. 1 Purchased 5,000 shares of its own stock at $25 cash per share.
Jan. 5 Directors declared a $4 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 1,875 of its treasury shares at $29 cash per share.
Aug. 22 Sold 3,125 of its treasury shares at $22 cash per share.
Sept. 5 Directors declared a $4 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 $388,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Required:
1. Prepare journal entries to record each of these transactions for 2016.
Journal Entry Worksheet
- Record the purchase of 5,000 shares of its own common stock for $25 cash per share.
- Record the declaration of a cash dividend of $4 per share.
- Record the payment of the cash dividend.
- Record the reissue of 1,875 shares of the treasury stock for $29 cash per share.
- Record the reissue of 3,125 shares of the treasury stock for $22 cash per share.
- Record the declaration of a cash dividend of $4 per share.
- Record the payment of the cash dividend.
- Record the entry to close the income summary account having a credit balance of $388,000.
2. Prepare a statement of retained earnings for the year ended December 31, 2016.
3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2016.