Problem 1 - Cash dividends, treasury stock, and statement of retained earnings - Widget Corporation operates in
Question:
Problem 1 - Cash dividends, treasury stock, and statement of retained earnings -
Widget Corporation operates in Tampa, Florida and reports the following stockholders equity at December 31, 2019.
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Common stock$25 par value, 70,000 shares authorized, 42,000 shares issued and outstanding | $ | 1,050,000 |
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Paid-in capital in excess of par value, common stock |
| 84,000 |
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Retained earnings |
| 382,000 |
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Total stockholders equity | $ | 1,516,000 |
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During 2020, the following transactions affected its stockholders equity accounts.
1/2 |
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| Purchased 4,200 shares of its own stock at $25 cash per share.
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1/7 |
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| Directors declared a $1.50 per share cash dividend payable on February 28 to the February 9 stockholders of record.
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2/28 |
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| Paid the dividend declared on January 7.
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7/9 |
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| Sold 1,680 of its treasury shares at $30 cash per share.
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8/27 |
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| Sold 2,100 of its treasury shares at $20 cash per share.
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9/9 |
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| Directors declared a $2 per share cash dividend payable on October 22 to the September 23 stockholders of record.
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10/22 |
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| Paid the dividend declared on September 9.
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12/31 |
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| Closed the $64,000 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 companys balance sheet as of December 31, 2020.
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura