Reference no: EM132048880

Question - Journalizing dividends and treasury stock transactions and preparing the stockholders' equity section of the balance sheet:

Summerborn Manufacturing, Co. completed the following transactions during 2014: Nov. 8 Treasury Stock = $6500 CR Jan. 16 Declared a cash dividend on the 5%, $100 par noncumulative preferred stock (900 shares outstanding). Declared a $0.30 per share dividend on the 80,000 shares of $6 par value common stock outstanding. The date of record is January 31, and the payment date is February 15.

Feb.15 Paid the cash dividends.

Jun.10 Split common stock 2-for-1.

Jul. 30 Declared a 50% stock dividend on the common stock. The market value of the common stock was $9 per share.

Aug.15 Distributed the stock dividend.

Oct. 26 Purchased 1,000 shares of treasury stock at $13 per share.

Nov. 8 Sold 500 shares of treasury stock for $15 per share.

Nov.30 Sold 300 shares of treasury stock for $8 per share.

Requirements:

1. Record the transactions in Summerborn's general journal.

2. Prepare the Summerborn's stockholders' equity section of the balance sheet as of December 31, 2014. Assume that Summerborn was authorized to issue 2,000 shares of preferred stock and 400,000 shares of common stock. Both preferred stock and common stock were issued at par. The ending balance of retained earnings as of December 31, 2014, is $2,050,000.