Response to the following problem:
The following selected transactions occurred during the year:
Jan. 19 Paid cash dividends of $0.60 per share on the common stock. The dividend had been properly recorded when declared on December 28 of the preceding fiscal year for $31,500.
Feb. 2 Sold all of the treasury stock for $150,000.
Mar. 15 Issued 20,000 shares of common stock for $480,000.
July 30 Declared a 2% stock dividend on common stock, to be capitalized at the market price of the stock, which is $25 a share.
Aug. 30 Issued the certificates for the dividend declared on July 30.
Oct. 10 Purchased 5,000 shares of treasury stock for $105,000.
Dec. 30 Declared a $0.50-per-share dividend on common stock. In addition, net income was $182,500 for the year.
Instructions
1. Enter the January 1 balances in T-accounts for the stockholders' equity accounts listed. Also prepare T-accounts for the following: Paid-In Capital from Sale of Treasury Stock; Stock Dividends Distributable.
2. Journalize the entries to record the transactions, and post to the six selected accounts.
3. Prepare a retained earnings statement for the year ended December 31, 2007.
4. Prepare the Stockholders' Equity section of the December 31, 2007, balance sheet.