Problem 11-2B

Cash dividends, treasury stock, and statement of retained earnings

C3 P2 P3

Balthus Corp. reports the following components of stockholders equity at December 31 of the prior year .

It completed the following transactions related to stockholders equity during the current year.

Jan. 10Purchased 40,000 shares of its own stock at $12 cash per share.

Mar. 2Directors declared a $1.50 per share cash dividend payable on March 31 to the March 15 stockholders of record.

Mar. 31Paid the dividend declared on March 2.

Nov. 11Sold 24,000 of its treasury shares at $13 cash per share.

Nov. 25Sold 16,000 of its treasury shares at $10.50 cash per share.

Dec. 1Directors declared a $2.50 per share cash dividend payable on January 2 to the December 10 stockholders of record.

Dec. 31Closed the $1,072,000 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 current year ended December 31.

3.Prepare the stockholders equity section of the balance sheet as of December 31 of the current yea