Problem:
During 2006, Bailey Corporation incurred the following transactions:
Jan 1: Issued 25,000 shares of $2 par value common stock at $10 per share.
June 15: Reacquired 2,000 shares of common stock sold on Jan. 1 for $11 per share.
Aug. 10: Sold 1,000 shares of its treasury stock purchased on June 15 for $11.50 per share.
Sept. 30: The board of directors declares a 10% stock dividend on the common stock. The current selling price of the common stock is $13 per share.
Nov. 30: The board of directors declares a cash dividend of $.50 per share payable to stockholders on December 15.
Dec. 15: Paid the cash dividends declared on November 30.
Required:
a. Record journal entries for the above transactions.
b. Prepare the stockholder's equity section of the balance sheet for Bailey Corporation as of Dec. 2006. The retained earnings account had a value of $100,000 before the above transactions.