Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders’ equity

The balance sheet of Goldstein Management Consulting, Inc. at December 31, 2017, reported the following stockholders’ equity:

Common Stock—\(10 Par Value; 350,000 shares

authorized, 32,000 shares issued and outstanding

Paid-In Capital:

160,000

\) 320,000

650,000

Retained Earnings

Total Stockholders’ Equity \( 810,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 330,000

Total Paid-In Capital

During 2018, Goldstein completed the following selected transactions:

Feb. 6 Declared a 15% stock dividend on common stock. The market value of

Goldstein’s stock was \)25 per share.

15 Distributed the stock dividend.

Jul. 29 Purchased 2,300 shares of treasury stock at \(25 per share.

Nov. 27 Declared a \)0.10 per share cash dividend on the common stock outstanding.

Requirements

1. Record the transactions in the general journal.

Step by step solution

01

Meaning of Journal

Journal is the first step of the accounting process, which means recording every business's monetary transaction.

02

Journals

Date	Transaction	Debit	Credit
Feb 6	Stock dividend	$120,000
	Common stock distributable		$48,000
	Paid- in capital in excess of par		$72,000
	(To record stock dividend declared)
Feb 15	Common stock distributable	$48,000
	Common stock		$48,000
	(To record stock dividend paid)
July 29	Treasury stock	$57,500
	Cash		$57,500
	(To record purchase of treasury stock)
Nov 27	Retained earnings	$3,200
	Common stock dividend payable		$3,200
	(To record dividend declared)

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