Problem - Cash dividends, treasury stock, and statement of retained earnings
Context Corporation reports the following components of stockholders' equity on December 31, 2011.
Common stock-$20 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $ 900,000
Paid-in capital in excess of par value, common stock 80,000
Retained earnings 430,000
Total stockholders' equity $ 1,410,000
In year 2012, the following transactions affected its stockholders' equity accounts.
Jan. 1 Purchased 4,500 shares of its own stock at $25 cash per share.
Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 1,688 of its treasury shares at $29 cash per share.
Aug. 22 Sold 2,812 of its treasury shares at $22 cash per share.
Sept. 5 Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct. 28 Paid the dividend declared on September 5.
Dec. 31 Closed the $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Required:
1. Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.