Question

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016:

Common stock—$25 par value, 60,000 shares authorized, 37,000 shares issued and outstanding	$	925,000
Paid-in capital in excess of par value, common stock		74,000
Retained earnings		364,000
Total stockholders’ equity	$	1,363,000

In year 2017, the following transactions affected its stockholders’ equity accounts.

Jan.		2		Purchased 3,700 shares of its own stock at $25 cash per share.
Jan.		7		Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record.
Feb.		28		Paid the dividend declared on January 7.
July		9		Sold 1,480 of its treasury shares at $30 cash per share.
Aug.		27		Sold 1,850 of its treasury shares at $20 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 $59,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Answer 1

1
Date	General Journal	Debit	Credit
2-Jan	Treasury stock, common	92,500		=3700*25
	Cash		92,500
7-Jan	Retained earnings	49,950		=(37000-3700)*1.5
	Common dividend payable		49,950
28-Feb	Common dividend payable	49,950
	Cash		49,950
9-Jul	Cash	44,400		=1480*30
	Treasury stock, common		37,000	=1480*25
	Paid-in capital, treasury stock		7,400
27-Aug	Cash	37,000		=1850*20
	Paid-in capital, treasury stock	7,400
	Retained earnings	1,850
	Treasury stock, common		46,250	=1850*25
9-Sep	Retained earnings	73,260		=(37000-3700+1480+1850)*2
	Common dividend payable		73,260
22-Oct	Common dividend payable	73,260
	Cash		73,260
31-Dec	Income summary	59,000
	Retained earnings		59,000
2
	ALEXANDER CORPORATION
	Statement of Retained Earnings
	For Year Ended December 31, 2017
	Retained earnings, December 31, 2016	364,000
	Add: Net income	59,000
		423,000
	Less: Cash dividends declared	(123,210)
	Less: Treasury stock reissuances	(1,850)
	Retained earnings, December 31, 2017	297940
3
	ALEXANDER CORPORATION
	Stockholders’ Equity Section of the Balance Sheet
	December 31, 2017
	Common stock - $25 par value	925,000
	Paid-in capital in excess of par value, common stock	74,000
	Retained earnings	297,940
	Less cost of treasury stock	(9,250)
	Total stockholders’ equity	1,287,690