Problem 13-2A Cash dividends, treasury stock, and statement of retained earnings L.O. C3, P2, P3 [The following information applies to the questions displayed below.] Context Corporation reports t

Problem 13-2A Cash dividends, treasury stock, and statement of retained earnings L.O. C3, P2, P3

[The following information applies to the questions displayed below.]

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.

Problem 13-2A Part 1

Required:

1. Prepare journal entries to record each of these transactions for 2012. (Omit the “$” sign in your response.)

Date General Journal Debit Credit

Jan. 1

Jan. 5

Feb. 28

July 6

Aug. 22

Sept. 5

Oct. 28

Dec. 31

Problem 13-2A Part 2

2.

Prepare a statement of retained earnings for the year ended December 31, 2012. (Amounts to be deducted should be indicated by a minus sign. Omit the “$” sign in your response.)

CONTEXT CORPORATION

Statement of Retained Earnings

For Year Ended December 31, 2012

Retained earnings, Dec. 31, 2011 $

Retained earnings, Dec. 31, 2012 $

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