Chapter 8, Problem 26P

Problem 8-26 Treasury stock transactions and appropriation of retained earnings

Choctaw Co. completed the following transactions in 2018, the first year of operation:

1. 1. Issued 20,000 shares of $10 par common stock for $10 per share.
2. 2. Issued 3,000 shares of $20 stated value preferred stock for $20 per share.
3. 3. Purchased 1,000 shares of common stock as treasury stock for $12 per share.
4. 4. Declared a $2,000 cash dividend on preferred stock.
5. 5. Sold 500 shares of treasury stock for $14 per share.
6. 6. Paid $2,000 cash for the preferred dividend declared in Event 4.
7. 7. Earned cash revenues of $78,000 and incurred cash expenses of $41,000.
8. 8. Appropriated $8,000 of retained earnings.

Required

1. a. Organize the transaction in accounts under an accounting equation.
2. b. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2018.