Question

Required:
1. Prepare journal entries to record each of these transactions for 2017.
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2017.

Alexander Corporation reports the following components of stockholders’ equity on December 31, 2016:

Common stock—$25 par value, 70,000 shares authorized, 49,000 shares issued and outstanding	$	1,225,000
Paid-in capital in excess of par value, common stock		98,000
Retained earnings		406,000
Total stockholders’ equity	$	1,729,000

In year 2017, the following transactions affected its stockholders’ equity accounts.

Jan.		2		Purchased 4,900 shares of its own stock at $25 cash per share.
Jan.		7		Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record.
Feb.		28		Paid the dividend declared on January 7.
July		9		Sold 1,960 of its treasury shares at $30 cash per share.
Aug.		27		Sold 2,450 of its treasury shares at $20 cash per share.
Sept.		9		Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record.
Oct.		22		Paid the dividend declared on September 9.
Dec.		31		Closed the $71,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Answer 1