prepare the stockholders rsquo equity section of franklin foods rsquo balance sheet 551079

Journalizing dividend and treasury stock transactions, and preparing stockholders’ equity

The balance sheet of Franklin Foods, at December 31, 2011, reported 110,000 shares of no-par common stock authorized, with 30,000 shares issued and a Common stock balance of $180,000. Retained earnings had a balance of $120,000. During 2012, the company completed the following selected transactions:

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Mar

15

Purchased 8,000 shares of treasury stock at $6 per share.

Apr

30

Distributed a 5% stock dividend on the outstanding shares of common stock. The market value of common stock was $8 per share.

Dec

31

Earned net income of $109,000 during the year. Closed net income to Retained earnings.

Requirements

1. Record the transactions in the general journal. Explanations are not required.

2. Prepare the stockholders’ equity section of Franklin Foods’ balance sheet at December 31, 2012.

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