Question

Required:
1. Prepare journal entries to record each of these transactions for 2017.
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017.

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

Common stock—$25 par value, 70,000 shares authorized, 49,000 shares issued and outstanding	$	1,225,000
Paid-in capital in excess of par value, common stock		98,000
Retained earnings		406,000
Total stockholders’ equity	$	1,729,000

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

Jan.		2		Purchased 4,900 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 1,960 of its treasury shares at $30 cash per share.
Aug.		27		Sold 2,450 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 $71,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Answer 1

1. Journal entries to record each of these transactions for 2017.

Date	Particulars	L.F	Amount ($)	Amount ($)
Jan-02	Treasury Stock (4,900*25)		122500
	Cash			122500
Jan-07	Cash Dividend (49,000-4,900)*1.5)		66,150
	Cash Dividend payable			66,150
	(For dividend declared)
Feb-28	Cash Dividend payable		66,150
	Cash			66,150
	(For dividend paid)
Jul-09	Cash (1,960*30)		58800
	Treasury Stock (1,960*25)			49000
	Additional paid in capital-treasury stock			9800
Aug-27	Cash (2,450*20)		49000
	Additional paid in capital-treasury stock		12250
	Treasury Stock (2,450*25)			61250
Sep-09	Cash Dividend (48,510*2)		97,020
	Cash Dividend payable			97,020
	(For dividend declared)
Oct-22	Cash Dividend payable		97,020
	Cash			97,020
	(For dividend paid)
Dec-31	Income Summary		71,000
	Retained earnings			71,000
	(For income balance closed to retained earnings account)

2. Retained earning statement

Alexander Corporation
Statement of retained earnings
For Year Ended December 31, 2016
Retained earnings, January 1	406,000
Add:
Net Income	71,000
Less:	0
Dividends	163,170
Total stockholders equity	313,830

3. stockholders equity

Alexander Corporation
Stockholders Equity Section of the balance sheet
December 31, 2016
Paid in capital
Common Stock $25 par 70,000 shares authorized
49,000 shares issued and outstanding	1,225,000
Paid in Capital in excess of Par-Common stock	98,000
Paid in Capital in excess of Par-Treasury stock	-2450
Retained earnings	313,830
Total paid in capital	1,634,380
Less: treasury stock	12250
Total stockholders equity	1,622,130