(Learning Objectives 2, 3, 4: Accounting for changes in shareholders’ equity)

Clubhouse, Inc., ended 20X6 with 7 million shares of $1 par ordinary share issued and outstanding. Beginning additional paid-in capital was $10 million, and Retained Earnings totaled

$35 million:

■ In April 20X7, Clubhouse issued 5 million shares of ordinary shares at a price of $3 per share.

■ In June, the company distributed a 10% share dividend at a time when Clubhouse’s ordinary shares had a market value of $6 per share.

■ Then in September, Clubhouse’s shares price dropped to $2 per share and the company purchased 5 million shares of treasury share.

■ For the year, Clubhouse earned net income of $22 million and declared cash dividends of $12 million.

❙ Requirement 1. Complete the following tabulation to show what Clubhouse should report for shareholders’ equity at December 31, 20X7. Journal entries are not required.

Quiz Test your understanding of shareholders’ equity by answering the following questions. Select the best choice from among the possible answers given.