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:
| 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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