Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders’ equity
The balance sheet of Goldstein Management Consulting, Inc., at December 31, 2011, reported the following stockholders’ equity:
| Paid-in capital: | |
| Common stock, $10 par, 200,000 shares authorized, 15,000 shares issued | $150,000 |
| Paid-in capital in excess of par—common | 310,000 |
| Total paid-in capital | 460,000 |
| Retained earnings | 162,000 |
| Total stockholders’ equity | $622,000 |
During 2012, Goldstein completed the following selected transactions:
| Feb | 6 | Distributed a 5% stock dividend on the common stock. The market value of Goldstein’s stock was $21 per share. |
| Jul | 29 | Purchased 2,300 shares of treasury stock at $21 per share. |
| Nov | 27 | Declared a $0.10 per share cash dividend on the 13,450 shares of common stock outstanding. The date of record is December 17, 2012, and the payment date is January 7, 2013. |
| Dec | 31 | Closed the $81,000 net income to Retained earnings. |
Requirements
1.Record the transactions in the general journal.
2.Prepare a retained earnings statement for the year ended December 31, 2012.
3.Prepare the stockholders’ equity section of the balance sheet at December 31, 2012.
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