Reddington International Corporation (Reddington) has recently asked you to design and implement an accounting system in Excel that separately maintains its stockholders equity accounts. Reddington has two classes of shares: 1) cumulative preferred, and 2) common. While this sounds like a big, complicated job, you readily accepted its offer to pay you $200,000 for your hard work.

To begin, you first asked Reddingtons CFO, Mrs. Keen for electronic copies of all general ledger entries pertaining to stockholders equity to date, plus all previous Statements of Shareholders Equity to date. Mrs. Keen informed you that literally all of Reddingtons books and records were recently destroyed in an unfortunate office fire. The only piece of information she was able to provide was a paper copy of Reddingtons Statement of Shareholders Equity for 2014, and 2015 (provided on the last page of this document).

Mrs. Keen has a photographic memory (thank goodness!), so she was able to recall the following transactions that occurred during 2016:

On January 1, 2016, Reddingtons Board of Directors declared and distributed a property dividend consisting of the corporate bonds of Dembe Unlimited, Inc. (Dembe) that Reddington purchased at par to hold to maturity. The thirty-year bonds have a face value of $1 million, a stated rate of 5%, and have 10 years remaining until maturity. Interest is paid on them at December 31 each year. On January 1, 2016, the market interest rate was 4%.

On September 16, 2016, Reddington repurchased $23 million worth of its common stock when the market value was $5.75 per share. Redding would like you to account for the repurchase of shares as if they are retired.

Total revenues in 2016 were $15.241 billion and total expenses totaled $5 billion. All revenue and expense transactions were in cash.

Required

Remember that your task is to generate an accounting system that maintains stockholders equity accounts in Excel starting from scratch. To do so, you must complete the following steps:

On the first tab of the Excel file, use journal entries to establish beginning balances for each of the shareholders equity accounts as of their earliest known dates. In other words, this initial journal entry must move each stockholders equity accounts existing balance of 0 within your system (because nothing exists in it yet) to their balances as of 1-1-2014. Assume cash is the only asset on Reddingtons Balance Sheet.

On the second tab, prepare journal entries for the events and transactions that affected Stockholders Equity during 2014 and 2015 (you can infer them from the provided Statement).

On the third tab, prepare journal entries for the events Mrs. Keen recalled from 2016.

On the fourth tab, prepare the comparative Statement of Stockholders Equity, the stockholders equity section of the Balance Sheet, and comparative basic EPS for years ended 2015 and 2016. The numbers on the statements should not be hard keyed (where applicable); rather, they should reference cells or functions of cells from the previous three tabs.

REDDINGTON INTERNATIONAL CORPORATION

Statement of Shareholders Equity

($ in millions)

	Preferred Stock $20 par	Common Stock $0.50 par	Additional Paid-in Capital	Retained Earnings	Total Shareholders Equity
Balance at January 1, 2014		110	990	18,780	19,880
Preferred Shares	20		940		960
Common Shares		14	126		140
Cash dividend, preferred				(1)	(1)
Cash dividend, common				(15)	(15)
Net Income				2,900	2,900
Balance at December 31, 2014	20	124	2,056	21,664	23,864
Share repurchase		(6)	(54)	(40)	(100)
Cash dividend, preferred				(1)	(1)
Cash dividend, common				(19)	(19)
Stock dividend 3 for 2		5		(5)
Net Income				3,805	3,805
Balance at December 31, 2015	20	123	2,002	25,404	27,549