Problem - "Rocklin Corporation reports the following components of stockholders' equity on December 31,2009.
Common stock, $25 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $1,125,000
Paid in capital in excess of par value, common stock $60,000
Retained earnings $460,000
Total stockholders' equity $1,645,000
In year 2010, the following transactions affected its stockholders' equity accounts.
Jan 1: Purchased 4,500 shares of its own stock at $25 per share.
Jan 5: Directors declared a $3 per share cash dividend payable on Feb 28 to the Feb 5 stockholders of record.
Feb 28: Paid 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 $3 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct 28: Paid the dividend declared on Sept 5.
Dec 31: Closed the $388,000 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 2010.
2. Prepare a statement of retained earnings for the year ended Dec 31, 2010.
3. Prepare the stockholders' equity section of the company's balance sheet as of December 31, 2010.