Requirement-1:
To prepare:
The
Requirement-1:

Answer to Problem 1GLP
Solution:
The journal entries to record the transactions for 2016 are as follows:
Journal entries | |||
Date | Account title | Debit | Credit |
Jan. 1 | $ 80,000 | ||
Cash | $ 80,000 | ||
Jan. 5 | $ 72,000 | ||
Common Dividend Payable | $ 72,000 | ||
Feb. 28 | Common Dividend Payable | $ 72,000 | |
Cash | $ 72,000 | ||
Jul. 6 | Cash | $ 36,000 | |
Treasury Stock | $ 30,000 | ||
Paid in excess par- Treasury stock | $ 6,000 | ||
Aug. 22 | Cash | $ 42,500 | |
Paid in excess par- Treasury stock | $ 6,000 | ||
Retained earnings (50000-42500-6000) | $ 1,500 | ||
Treasury Stock | $ 50,000 | ||
Sept. 5 | Retained earnings | $ 80,000 | |
Common Dividend Payable | $ 80,000 | ||
Oct. 28 | Common Dividend Payable | $ 80,000 | |
Cash | $ 80,000 | ||
Dec. 31 | Income Summary | $ 388,000 | |
Retained earnings | $ 388,000 |
Explanation of Solution
Explanation:
The journal entries to record the transactions for 2016 are explained as follows:
Journal entries | |||
Date | Account title | Debit | Credit |
Jan. 1 | Treasury Stock | $ 80,000 | |
Cash | $ 80,000 | ||
(Being 4000 treasury shares purchased @ $20 each for total $80,000) | |||
Jan. 5 | Retained earnings | $ 72,000 | |
Common Dividend Payable | $ 72,000 | ||
(Being Cash dividend declared on (40000-4000) 36000 outstanding shares @ $2 each for total $72,000) | |||
Feb. 28 | Common Dividend Payable | $ 72,000 | |
Cash | $ 72,000 | ||
(Being Cash dividend declared paid in cash) | |||
Jul. 6 | Cash | $ 36,000 | |
Treasury Stock | $ 30,000 | ||
Paid in excess par- Treasury stock (36000-30000) | $ 6,000 | ||
(Being 1500 treasury shares sold for $24 each cash = (1500*24) = $36,000. The cost of these treasury stock is (1500*20) = $30,000 | |||
Aug. 22 | Cash | $ 42,500 | |
Paid in excess par- Treasury stock | $ 6,000 | ||
Retained earnings (50000-42500-6000) | $ 1,500 | ||
Treasury Stock | $ 50,000 | ||
(Being 2500 treasury shares sold for $17 each cash = (2500*17) = $42,500. The cost of these treasury stock is (2500*20) = $50,000 | |||
Sept. 5 | Retained earnings | $ 80,000 | |
Common Dividend Payable | $ 80,000 | ||
(Being Cash dividend declared on (36000+1500+2500)= 40,000 outstanding shares @ $2 each for total $80,000) | |||
Oct. 28 | Common Dividend Payable | $ 80,000 | |
Cash | $ 80,000 | ||
(Being Cash dividend declared paid in cash) | |||
Dec. 31 | Income Summary | $ 388,000 | |
Retained earnings | $ 388,000 | ||
(Being net income for the year 388,000 closed) |
Conclusion:
Hence, the journal entries to record the transactions for 2016 are prepared.
2)
To prepare:
The Statement of Retained earnings for the year ended December 31, 2016
2)

Answer to Problem 1GLP
Solution:
The Statement of Retained earnings for the year ended December 31, 2016 is as follows:
Statement of Retained earnings | |
For the year ended December 31, 2016 | |
Retained Earnings balance as on Dec. 31, 2015 | $ 270,000 |
Net Income for the year 2016 | $ 388,000 |
Cash Dividends Declared | $ (152,000) |
Treasury stock adjustment | $ (1,500) |
Retained Earnings balance as on Dec. 31, 2016 | $ 504,500 |
Explanation of Solution
Explanation:
The Statement of Retained earnings for the year ended December 31, 2016 is explained as follows:
Statement of Retained earnings | |
For the year ended December 31, 2016 | |
Retained Earnings balance as on Dec. 31, 2015 | $ 270,000 |
Add: Net Income for the year 2016 | $ 388,000 |
Less: Cash Dividends Declared (72000+80000) | $ (152,000) |
Less: Treasury stock adjustment | $ (1,500) |
Retained Earnings balance as on Dec. 31, 2016 | $ 504,500 |
Conclusion:
Hence Retained Earnings balance as on Dec. 31, 2016 is $504,500
Requirement-3:
To prepare:
The
Requirement-3:

Answer to Problem 1GLP
Solution:
The Stockholder's Equity Section of the Balance sheet as on December 31, 2016 is as follows:
Stockholder's Equity Section of the Balance sheet | |
As on December 31, 2016 | |
Common Stock-$10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding | $ 400,000 |
Paid in capital in excess of par value, common stock | $ 60,000 |
Retained earnings | $ 504,500 |
Total Stock holder's Equity | $ 964,500 |
Explanation of Solution
Explanation:
The Stockholder's Equity Section of the Balance sheet as on December 31, 2016 is explained as follows:
Stockholder's Equity Section of the Balance sheet | |
As on December 31, 2016 | |
Common Stock-$10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding | $ 400,000 |
Paid in capital in excess of par value, common stock | $ 60,000 |
Retained earnings | $ 504,500 |
Total Stock holder's Equity | $ 964,500 |
Conclusion:
Hence Total Stock holder's Equity as on Dec. 31, 2016 is $964,500
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Chapter 13 Solutions
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