a. Prepare in general journal form the entries to record these transactions.b. Prepare the stockholders' equity section of the balance sheet at December 31, 2021. Use the format illustrated in Exhibit 12-6. Includea supporting schedule showing your computation of retained earnings at that date.c. Compute the maximum cash dividend per share that legally could be declared at December 31, 2021, without impairing the paid-incapital of Thompson Service. (Hint: The availability of retained earnings for dividends is restricted by the cost of treasury stock owned.) At the beginning of 2021, Thompson Service, Inc., showed the following amounts in the stockholders' equity section of its balancesheet.Stockholders' equity:Capital stock, $1 par value, 500,000 shares authorized, 382,000 issued and outstandingAdditional paid-in capital: capital stockTotal paid-in capitalRetained earningsTotal stockholders' equityPage 557Instructions$ 382,0004,202,000$4,584,0002,704,600$7,288,600The transactions relating to stockholders' equity during the year are as follows.Jan. 3 Declared a dividend of $1 per share to stockholders of record on January 31, payable on February 15.Feb. 15Paid the cash dividend declared on January 3.Apr. 12The corporation purchased 6,000 shares of its own capital stock at a price of $40 per share.May 9Reissued 4,000 shares of the treasury stock at a price of $44 per share.June 1Declared a 5 percent stock dividend to stockholders of record at June 15, to be distributed on June 30. The market price of the stoDistributed the stock dividend declared on June 1.June 30Aug. 4Reissued 600 of the 2,000 remaining shares of treasury stock at a price of $37 per share.Dec. 31 The Income Summary account, showing net income for the year of $1,928,000, was closed into the Retained Earnings account.Dec. 31 The $382,000 balance in the Dividends account was closed into the Retained Earnings account.

Stockholders' equity is a part of our Balance sheet which shows the amount that is invested through…

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FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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. Prepare the stockholders' equity section of the balance sheet at December 31, 2021. a supporting schedule showing your computation of retained earnings at that date.