Common stock-$10 par value, 100,000 shares authorized, 40,000 shares issued and outstanding $ 400,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 270,000 Total stockholders' equity $ 730,000 In year 2017, the following transactions affected its stockholders' equity accounts. Jan. 1 Purchased 4,000 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $2 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28 Paid the dividend declared on January 5. July 6 Sold 1,500 of its treasury shares at $24 cash per share. Aug. 22 Sold 2,500 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.

treasury stock 80,000 debit

cash 80,000 credit

dividends 72,000 debit

dividends payable 72,000 credit

dividends payable 72,000 debit

cash 72,000 credit

cash 36,000

treasury stock 30,000 credit

add paid-in TS 6,000 credit

cash 42,500 debit

add paid-in TS 6,000 debit

retained earnings 1,500 debit

treasury stock 50,000 credit

dividends 80,000 debit

dividends payable 80,000 credit

dividends payable 80,000 debit

cash 80,000 credit

Explanation:

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

Jan 1st: The treasury stock are recorded at cost

Jan 5th

40,000 - 4,000 = 36,000 shares outstanding

x 2 dividend per share

dividends 72,000

Feb 28th we write-off the payable and decrease cash

July 6th

proceeds 1,500 x $24 = 36,000

cost 1,500 x $20 = 30,000

additional paid-in 6,000

August 22

proceeds 2,500 x $17 = 42,500

cost 2,500 x $20 = 50,000

"loss" (7,500)

we cannot declare loss when selling own share, we first decrease the additional paid-in treasury stock and if needed like in this case; we decrease retained earings

Sep 5th

there are 40,000 outstanding x $2 = 80,000

Oct 28th we write-off the payable and decrease cash