558 LO 12-4, LO 12-8 PROBLEM 12.6B Recording Stock Dividends and Treasury Stock Transactions Jan. 5 Chapter 12 Income and Changes in Retained Earnings Feb. 18 Apr. 20 The transactions relating to stockholders' equity during the year are as follows: May 25 June 15 June 30 Aug. 12 At the beginning of 2015, Greene, Inc., showed the following amounts in the stockholders' equity section of its balance sheet: Dec. 31 Stockholders' equity: Capital stock, $1 par value, 1,000,000 shares authorized, 560,000 issued and outstanding Additional paid-in capital: capital stock Total paid-in capital Dec. 31 Retained earnings Total stockholders' equity $ 560,000 4,480,000 5,040,000 3,000,000 $8,040,000 Declared a dividend of $1 per share to stockholders of record on January 31, payable on February 18. Paid the cash dividend declared on January 5. The corporation purchased 1,000 shares of its own capital stock at a price of $10 per share. Reissued 500 shares of the treasury stock at a price of $12 per share. Declared a 5 percent stock dividend to stockholders of record at June 22, to be distrib- uted on June 30. The market price of the stock at June 15 was $11 per share. (The 500 shares remaining in the treasury do not participate in the stock dividend.) Distributed the stock dividend declared on June 15. Reissued 300 of the 500 remaining shares of treasury stock at a price of $9.75 per share. The Income Summary account, showing net income for the year of $1,750,000, was closed into the Retained Earnings account. The $560,000 balance in the Dividends account was closed into the Retained Earnings account. Instructions a. Prepare in general journal form the entries to record the above transactions. b. Prepare the stockholders' equity section of the balance sheet at December 31, 2015. Use the format illustrated in Exhibit 12-6. Include a supporting schedule showing your computation of retained earnings at that date. c. Compute the maximum cash dividend per share that legally could be declared at Decem- ber 31, 2015, without impairing the paid-in capital of Greene, Inc. (Hint: The availability of retained earnings for dividends is restricted by the cost of treasury stock owned.)

LO124,LO128 PROBLEM 12.6B Recording Stock Dividends and Treasury Stock Transactions At the beginning of 2015, Greene, Inc, showed the following amounts in the stocklolders' equity section of its balance sheet: Chapter 12 Income and Changes in Pletained Eamings The transactions relating to stockholders' equity during the year are as follows: Jan. 5 Declared a dividend of 51 per share to stocitholders of record on January 31 , payable on February 18. Feb. 18 Paid the cash dividend declared on January 5. Apr. 20 The corporation purchased 1,000 shares of its own capital stock at a price of $10 per share. May 25 Reissued 500 shares of the treasury stock at a price of $12 per share. June 15 Declared a 5 percent stock dividend to stockholders of record at June 22 , to be distributed on June 30. The market price of the stock at June 15 was $11 per share. (The 500 shares remaining in the treasury do not participate in the stock drvidend.) June 30 Distributed the stock dividend declared on June 15. Aug. 12 Reissued 300 of the 500 remaining shares of treasary stock at a price of $9.75 per share. Dec. 31 The Income Summary account, showing net income for the year of $1,750,000, was closed into the Retained Earnings account. Dec. 31 The $560,000 bulance in the Dividends account was closed into the Retained Eamings account. Instructions a. Prepare in general journal form the entries to record the above transactions. b. Prepare the stockholders' equity section of the balance sheet at December 31,2015 . Use the format illustrated in Exhibit 12-6. Inclade a supporting schedule showing your computation of retained earnings at that date. c. Compute the maximum eash dividend per share that legally could be declared at December 31, 2015, without impairing the paid-in capital of Greene, Ine. (Hint: The availability of retained earnings for dividends is restricted by the cost of treasury stock ownod.)