Prepare journal entries for the dates and statement of equit

Prepare journal entries for the dates and statement of equity section

Context Corporation reports the following components of shareholders’ equity on December 31, 20X3:

Common stock - $10 par value; 50,000 shares authorized
20,000 shares issued and outstanding....................... $200,000
Paid-in capital in excess of par value, common stock....... $30,000
Retained earnings...........................................$135,000

In the year 20X4, the following transactions affected its shareholders’ equity accounts:

January 1: Purchased 2,000 shares of its own stock at $20.00 cash per share.

January 5: Directors declared a $2.00 per share dividend payable on February 28 to the February 5 shareholders of record.

February 28: Paid dividend declared on January 5.

July 6: Sold 750 off its treasury shares at $17.00 cash per share. This sale is part of the January 1 purchase at $20.00 per share).

September 5: Directors declared a $2.00 per share cash dividend payable on October 28 to the September 25 shareholders of record.

October 28: Paid the dividend declared on September 5.

December 31: Closed the $194,000 credit balance from net income of December 31, 20X4, in the income summary account to retained earnings.

Common stock - $10 par value; 50,000 shares authorized 20,000 shares issued and outstanding....................... $200,000 Paid-in capital in excess of par value, common stock....... $30,000 Retained earnings...........................................$135,000

Solution

01-Jan Treasury stock 40000 (2000*20)             Cash 40000 05-Jan Cash dividend 36000 (18000*2)             Dividend payable 36000 28-Feb Dividend payable 36000              Cash 36000 06-Jul Cash 12750 (750*17) Retained earnings 2250 (750*3)              Treasury stock 15000 (750*20) 05-Sep Cash dividend 37500 (18750*2)             Dividend payable 37500 28-Oct Dividend payable 37500              Cash 37500 31-Dec Income summary 194000              Retained earnings 194000 Statement of equity 20000 shares issued and outstanding 200000 Paid in capital in exxess of par 30000 Retained earnings 253250 Total 483250 Less Treasury stock (1250*20) 25000 Total equity section 458250 Retained earnings Beginning 135000 Add Net income 194000 Total 329000 Less Cash dividend 73500 (36000+37500) Less Treasury stock 2250 Ending retained earnings 253250