Question: 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. Sept. 9 Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record. 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. 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.