accounting 458457

Context Corporation reports the following components of stockholders equity on December 31, 2011.

Common stock $10 par value, 50,000 shares authorized,

20,000 shares issued and outstanding $200,000

Paid in capital in excess of par value, common stock 30,000

Retained earnings 135,000

Total stockholders’ equity $365,00

In year 2012, the following transactions affected its stockholders’ equity accounts.

Jan. 1 Purchased 2,000 shares of its own stock at $20 each per share.

Jan. 5 Directors declared a $2 per share cash dividend payable on Feb. 28 to Feb. 5 stockholders of record.

Feb. 28 Paid the dividend declared on January 5.

July 6 Sold 750 of its treasury shares at $24 cash per share.

Aug. 22 Sold 1,250 of its treasury shares at $17 cash per share.

Sept 5 Directors declared a $2 per share cash dividend payable on October 28 to the September 25 stockholders of record.

Oct. 28 Paid the dividend declared on September 5.

Dec 31 Closed the $194,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

Required

1. Prepare journal entries to record each of these transactions for 2012.

2. Prepare a statement of retained earnings for the year ended December 31, 2012.

3. Prepare the stockholders’ equity section of the company’s balance sheet as of December 31, 2012.