Alexander Corporation reports the following components of stockholders’ equity at December 31, 2019. Common stock—$25 par value, 70,000 shares authorized, 44,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 88,000 Retained earnings 389,000 Total stockholders’ equity $ 1,577,000 During 2020, the following transactions affected its stockholders’ equity accounts. Jan. 2 Purchased 4,400 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 1,760 of its treasury shares at $30 cash per share. Aug. 27 Sold 2,200 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 $66,000 credit balance (from net income) in the Income Summary account to Retained Earnings. Required: 1. Prepare journal entries to record each of these transactions. 2. Prepare a statement of retained earnings for the year ended December 31, 2020. 3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Alexander Corporation reports the following components of stockholders’ equity at December 31, 2019.


Common stock—$25 par value, 70,000 shares authorized, 44,000 shares issued and outstanding	$	1,100,000
Paid-in capital in excess of par value, common stock		88,000
Retained earnings		389,000
Total stockholders’ equity	$	1,577,000

During 2020, the following transactions affected its stockholders’ equity accounts.

Jan.	2	Purchased 4,400 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 1,760 of its treasury shares at $30 cash per share.
Aug.	27	Sold 2,200 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 $66,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required:
1. Prepare journal entries to record each of these transactions.
2. Prepare a statement of retained earnings for the year ended December 31, 2020.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2020.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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