Question

15-

Shown below in T-account format are the changes affecting the retained earnings of Brenner-Jude Corporation during 2021. At January 1, 2021, the corporation had outstanding 107 million common shares, $1 par per share.
  

Retained Earnings ($ in millions)
		109	Beginning balance
Retirement of 7 million common shares for $38 million	2
		98	Net income for the year
Declaration and payment of a $0.35 per share cash dividend	35
Declaration and distribution of a 6% stock dividend	25
		145	Ending balance

Required:
1. From the information provided by the account changes, you should be able to recreate the transactions that affected Brenner-Jude’s retained earnings during 2021. Prepare the journal entries that Brenner-Jude must have recorded during the year for these transactions. (Hint: In lieu of revenues and expenses, use an account titled “Income summary” to close net income or net loss.)
2. Prepare a statement of retained earnings for Brenner-Jude for the year ended 2021.

Answer 1