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In: Accounting

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016: Common stock—$25 par...

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


Common stock—$25 par value, 60,000 shares authorized,
36,000 shares issued and outstanding $ 900,000
Paid-in capital in excess of par value, common stock 72,000
Retained earnings 361,000
Total stockholders’ equity $ 1,333,000


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

Jan. 2 Purchased 3,600 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 1,440 of its treasury shares at $30 cash per share.
Aug. 27 Sold 1,800 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 $58,000 credit balance (from net income) in the Income Summary account to Retained Earnings.


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.

Complete this question by entering your answers in the tabs below.

Required 1
Required 2
Required 3

Prepare a statement of retained earnings for the year ended December 31, 2017. (Amounts to be deducted should be indicated by a minus sign.)

ALEXANDER CORPORATION
Statement of Retained Earnings
For Year Ended December 31, 2017
Retained earnings, December 31, 2016selected answer correct $361,000selected answer correct
Add: Net incomeselected answer correct 58,000selected answer correct
$419,000
Less: Cash dividends declaredselected answer correct 119,880selected answer incorrect
Less: Treasury stock reissuancesselected answer correct 1,800selected answer incorrect
Retained earnings, December 31, 2017selected answer correct $540,680

I need help to solve the less: cash dividends delcared. as you can see I got it wrong and for the less: treasury stock too. please help to solve the problem.

Solutions

Expert Solution

Alexander Corporation

Journal entries

Date

General journal

Debit

Credit

Jan. 2

Treasury Stock

         90,000

Cash

         90,000

(To record Purchased 3,600 shares of its own stock at $25 cash per share.) (3600*25)

Jan. 7

Retained earnings

         48,600

Dividend payable

         48,600

(To record declared a $1.50 per share cash dividend payable on February 28.) ((36000-3600)*1.5)

Feb. 28

Dividend payable

         48,600

Cash

         48,600

(To record Paid the dividend declared on January 7.)

July 9

Cash (1440*30)

         43,200

Retained earnings (1440*(30-25))

           7,200

Treasury Stock (1440*25)

         36,000

(To record Sold 1,440 of its treasury shares at $30 cash per share.)

Aug. 27

Cash (1800*20)

         36,000

Retained earnings (1800*(25-20))

           9,000

Treasury Stock (1800*25)

         45,000

(To record Sold 1,800 of its treasury shares at $20 cash per share.)

Sept. 9

Retained earnings

         71,280

Dividend payable

         71,280

(To record declared a $2 per share cash dividend payable on October 22.) ((36000-3600+1440+1800)*2)

Oct. 22

Dividend payable

         71,280

Cash

         71,280

(To record Paid the dividend declared on September 9.)

Dec. 31

Income summary

         58,000

Retained earnings

         58,000

(To record Closed the $58,000 credit balance (from net income) in the Income Summary account to Retained Earnings.)

Alexander Corporation

Statement of retained earnings

For the year ended December 31, 2017

Retained earnings, December 31, 2016

361,000

Add: Net income

58,000

419,000

Less: Cash dividends declared (48600+71280)

-119880

Less: Treasury stock reissuances (9000-7200)

-1800

Retained earnings, December 31, 2017

297,320

Please note that Correct retained earnings is 297320, they might be wrong because they Add both value (419000+119880+1800 = 540680)

Alexander Corporation

Stockholders’ equity

On December 31, 2016

Common stock—$25 par value, 60,000 shares authorized

36000 shares outstanding

900000

Paid-in capital in excess of par value, common stock

72,000

Retained earnings

361000

Less: treasury stock ((3600-1440-1800)*25)

-9000

Stockholders’ equity

1324000

In case three items required presenting in Stockholder's equity then Treasury stock adjusted with common stock.


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