Reference no: EM132728726

The stockholder's equity of LDL Corporation at December 31, 2016 is shown below:

Common stock $10 par, 100,000 shares authorized, 40,000 shares issued $ 400,000
Additional paid in capital: common stock 200,000
Total paid in capital 600,000
Retained earnings 1,500,000
Total stockholder's equity 2,100,000

During 2017, the following transactions effecting stockholder's equity occurred.

i. A 5-for-4 stock split was proposed and 10,000 new shares were distributed to stockholders.
ii. The company purchased 2000 shares of its common stock on the open market at $37/share.
iii. The company reissued 1000 shares of treasury stock at $45 per share.
iv. Issued for cash 20,000 shares of previously unissued $8 par value common stock at a price of $45 per share.
v. A cash dividend of $1 per share was declared and payable on December 31.
vi. A 10% of the outstanding stocks dividend was declared. The market price was $48. Net income for the year was $177,000.

Required:

Problem a. Prepare journal entries to record the transactions related to stockholder's equity.

Problem b. Prepare statement of retained earnings for the year ended December 31, 2017.