Context Corporation reports the following components of stockholders’ equity on December 31, 2011. Common stock—$20 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $ 900,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 430,000 Total stockholders' equity $ 1,390,000 In year 2012, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 6,000 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 2,250 of its treasury shares at $24 cash per share. Aug. 22 Sold 3,750 of its treasury shares at $17 cash per share. Sept. 5 Directors declared a $4 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 $408,000 credit balance (from net income) in the Income Summary account to Retained Earnings.

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

Common stock—$20 par value, 100,000 shares authorized, 45,000 shares issued and    outstanding	$	900,000
Paid-in capital in excess of par value, common stock		60,000
Retained earnings		430,000
Total stockholders' equity	$	1,390,000

  

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

Jan.	1		Purchased 6,000 shares of its own stock at $20 cash per share.
Jan.	5		Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of record.
Feb.	28		Paid the dividend declared on January 5.
July	6		Sold 2,250 of its treasury shares at $24 cash per share.
Aug.	22		Sold 3,750 of its treasury shares at $17 cash per share.
Sept.	5		Directors declared a $4 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 $408,000 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.   Explanation: Jan. 1   Purchased treasury stock (6,000 × $20) = 120,000.         Jan. 5   Declared $4 dividend on 39,000 outstanding shares = 156,000         July 6   Cash = (2,250 × $24) = 54,000.       Treasury Stock, Common = (2,250 × $20) = 45,000.       Contributed Capital, Treasury Stock = (2,250 × $4) = 9,000.         Aug. 22   Cash = (3,750 × $17) = 63,750.       Treasury Stock, Common = (3,750 × $20) = 75,000.         Sept. 5   Declared $4 dividend on 45,000 outstanding shares = 180,000 2. Prepare a statement of retained earnings for the year ended December 31, 2012. (Amounts to be deducted should be indicated by a minus sign.) 3. Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2012.   Explanation: Common stock = $20 par value, 100,000 shares authorized, 45,000 shares issued and outstanding = $900,000