A. Prepare journal entries to record each of these transactions for 2016. B. Pre
ID: 2465379 • Letter: A
Question
A. Prepare journal entries to record each of these transactions for 2016.
B. Prepare a statement of retained earnings for the year ended December 31, 2016.
C. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2016
A. Prepare journal entries to record each of these transactions for 2016.
B. Prepare a statement of retained earnings for the year ended December 31, 2016.
C. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2016
Explanation / Answer
(A)
2 jan Treasury stock (3500*$25) Dr.$87500
To cash $87500
Jan7 Retained Earning Dr.$47250
To cash dividend payable(31500 *$1.5) $47250
Note:- Number of share issued = 35000 - 3500
=31500 shares
Feb 28 Cash dividend payable Dr.$47250
To cash $47250
July 9 cash (1400 * $30) Dr. $42000
To paid in captal in excess of par[($30 - $25)*1400] $7000
To Treasury Stock ( 1400 *$25) $35000
Aug 27 cash (1750 * $20) Dr. $35000
paid in captal from treasury stock [($25 - $20)*1750] Dr.$8750
To Treasury Stock ( 1750 *$25) $43750
Sept 9 Retained Earning Dr.$63000
To cash dividend payable(31500 *$2) $63000
Oct22 Cash Dividend payable Dr.$63000
To cash $63000
Dec31 Net Income Dr.$57000
To retained Earning $57000
(B) Statement of Retained Earning :
Opening balance as on 31 Dec,2015 $357000
Add: Net income $57000
less: Cash Dividend($47250 + $63000) ($110250)
Ending balance as on 31, Dec,2016 $303750