Question

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 85.00 million common shares, $1.5 par per share.

Retained Earnings ($ in millions)
		92	Beginning balance
Retirement of 5.0 million common shares for $29.0 million	3.10
		75	Net income for the year
Declaration and payment of a $0.30 per share cash dividend	24.00
Declaration and distribution of a 2% stock dividend	22.40
		117.50	Ending balance

Required:
1. Prepare the journal entries to record the transactions that affected Brenner-Jude's retained earnings during 2021 based on the information provided.
2. Prepare a statement of retained earnings for Brenner-Jude for the year ended 2021.

Answer 1

Answer:

Date	Particulars	Debit ($ in million)	Credit ($in million)
1	Common stock (5 million * $1 par value)	5
	Paid in excess of par (29-5-3.10)	20.9
	Retained earnings	3.10
	Cash		29
2	Income summary	75
	Retained Earnings		75
3	Retained earnings	24
	Cash		24
4	Retained Earnings	22.40
	Common stock ((85-5)million *2%*$1.5 par value)		2.4
	Paid in excess of par		20

Statement of retained earnings

Particulars	Amount ($ in million)
Beginning balance of Retained Earnings	92
Add: Net Income for the Year	75
Less: Retirement of common shares	3.10
Less: Cash dividend	24
Less: 2% Stock dividend	22.40
Ending Balance of Retained Earnings	117.5