Answer:
Whisper Co.
1. Journal Entries to record transactions:
Jan. 2 Debit Treasury stock $90,000
Debit Paid-in Capital in Excess $30,000
Credit Cash $120,000
To record the purchase of 6,000 shares of its own stock at $20 cash per share.
Jan. 5 Debit Cash Dividend $78,000
Credit Dividend Payable $78,000
To record the declaration of a $2 per share cash dividend payable on 39,000 (45,000 - 6,000) shares
Feb. 28 Debit Dividend Payable $78,000
Credit Cash $78,000
To record the payment of the dividends.
July 6 Debit Cash $54,000
Credit Treasury stock $33,750
Credit Paid-in Capital in Excess $20,250
To record the resale of 2,250 of its treasury shares at $24 cash per share.
Aug. 22 Debit Cash Dividend $90,000
Credit Dividend Payable $90,000
To record the declaration of a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record (45,000 shares).
Sept 5 Debit Cash $63,750
Credit Treasury stock $56,250
Credit Paid-in Capital in Excess $7,500
To record the resale of 3,750 of its treasury shares at $17 cash per share.
Oct. 28 Debit Dividend Payable $90,000
Credit Cash $90,000
To record the payment of the dividends.
Dec. 31 Debit Retained earnings $368,000
Credit Income Summary $368,000
To close the net loss to the retained earnings.
2. Statement of Retained Earnings for the year ended December 31, 2019
Retained earnings, December 31, 2018 $430,000
Net loss -368,000
Dividends paid -168,000
Retained earnings, December 31, 2019 ($106,000)
3. Stockholders' Equity, December 31, 2019:
Common stock—$15 par value, 100,000 shares authorized,
45,000 shares issued and outstanding $ 675,000
Paid-in capital in excess of par value, common stock 67,750
Retained earnings ($106,000)
Total stockholders' equity $ 636,750
Step-by-step explanation:
a) Data and Calculations:
Stockholders' Equity (December 31, 2018)
Common stock—$15 par value, 100,000 shares authorized,
45,000 shares issued and outstanding $ 675,000
Paid-in capital in excess of par value, common stock 70,000-30,000+20,250+7,500 = 67,750
Retained earnings 430,000
Total stockholders' equity $ 1,175,000
Transaction Analysis:
Jan. 2 Treasury stock $90,000 Paid-in Capital in Excess $30,000 Cash $120,000 purchase of 6,000 shares of its own stock at $20 cash per share.
Jan. 5 Cash Dividend $78,000 Dividend Payable $78,000
a $2 per share cash dividend payable on 39,000 (45,000 - 6,000) shares
Feb. 28 Dividend Payable $78,000 Cash $78,000
July 6 Cash $54,000 Treasury stock $33,750 Paid-in Capital in Excess $20,250 2,250 of its treasury shares at $24 cash per share.
Aug. 22 Cash Dividend $90,000 Dividend Payable $90,000
$2 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Sept 5 Cash $63,750 Treasury stock $56,250 Paid-in Capital in Excess $7,500 3,750 of its treasury shares at $17 cash per share.
Oct. 28 Dividend Payable $90,000 Cash $90,000
Dec. 31 Retained earnings $368,000 Income Summary $368,000
Dec. 31 Retained earnings $168,000 Cash Dividend $168,000