Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders’ equity
The balance sheet of MacMillan Management Consulting, Inc., at December 31, 2011, reported the following stockholders’ equity:
| Paid-in capital: | |
| Common stock, $12 par, 100,000 shares authorized, 20,000 shares issued | $ 240,000 |
| Paid-in capital in excess of par—common | 330,000 |
| Total paid-in capital | 570,000 |
| Retained earnings | 159,000 |
| Total stockholders’ equity | $ 729,000 |
During 2012, MacMillan completed the following selected transactions:
| Feb | 6 | Distributed a 15% stock dividend on the common stock. The market value of MacMillan’s stock was $26 per share. |
| Jul | 29 | Purchased 1,800 shares of treasury stock at $26 per share. |
| Nov | 27 | Declared a $0.30 per share cash dividend on the 21,200 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 $82,000 net income to Retained earnings. |
Requirements
1. Record the transactions in the general journal.
2. Prepare the 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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