Problem 18-2 Share buyback-comparison of retirement and treasury stock treatment [LO18-5]

The shareholders equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017:

Shareholders' Equity	($ in millions)
Common stock, 250 million shares at $1 par	$	250
Paid-in capitalexcess of par		2,250
Paid-in capitalshare repurchase		2
Retained earnings		1,500

Required: 1. During 2018, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock.

1. On February 5, 2018, TNL Systems purchased 7 million shares at $14 per share.
2. On July 9, 2018, the corporation sold 3 million shares at $16 per share.
3. On November 14, 2020, the corporation sold 3 million shares at $11 per share.

2. Prepare the shareholders equity section of TNL Systems balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 20182020 was distributed to shareholders as cash dividends.

Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 2 Prepare the entries for both the purchase and subsequent resale for the above transactions of the shares assuming the shares are viewed as treasury stock. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Date General Journal Debit Credit February 05, 2018 Treasury stock 98 Cash 98 2 July 09, 2018 Cash 48 Common stock Paid-in capital-excess of par 45 November 14, 202 Cash Paid-in capital-excess of par Treasury stock 42 Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 2 Prepare the shareholders' equity section of TNL Systems' balance sheet at December 31, 2020, comparing the two approaches. Assume all net income earned in 2018-2020 was distributed to shareholders as cash dividends. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Shareholder's Equity $ in millions Treasury stock Retirement Paid-in capital Common stock Paid-in capital-excess of par Retained earnings Less: Treasury stock Total shareholders' equity $249250 1,4741,486 $4,222 3,972 2,499 2,250 0