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Horngren'S Financial And Managerial Accounting
Found in: Page 720

Short Answer

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:


$ 320,000


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.


2. Prepare a retained earnings statement for the year ended December 31, 2018. Assume Goldstein’s net income for the year was $90,000.

Statement of Retained Earnings for the year ended December 31, 2018, is $246,800.

See the step by step solution

Step by Step Solution

Step 1: Basic calculation

Step 2: Statement of Retained Earnings-

Statement of Retained EarningsDecember 31, 2018

Retained Earnings, beginning of the year


Less: Dividend paid


Add: Net Income


Retained Earnings, ending of the year


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