Problem:
Journalizing dividend and treasury stock transactions, and preparing stockholders' equity
The balance sheet of Lennox Health Foods, at December 31, 2011, reported 120,000 shares of no-par common stock authorized, with 25,000 shares issued and a Common stock balance of $190,000. Retained earnings had a balance of $115,000. During 2012, the company completed the following selected transactions:
May 15
Purchased 9000 shares of treasury stock at $8.00 per share
April 30
Distributed a 10% stock dividend on the outsanding shares of common stock was $9.00 per share
Dec. 31
Earned net income of $110,000 during the year. Closed net income to Retained earnings.
Requirements
1. Record the transactions in the general journal. Explanations are not required.
2. Prepare the stockholders' equity section of Lennox Health Foods' balance sheet at December 31, 2012.