Question
Share Repurchases. Your company has the following Stockholders Equity as of the beginning of the current year Common Stock; 350,000 shares outstanding, $1 par $350,000
Share Repurchases. Your company has the following Stockholders Equity as of the beginning of the current year
Common Stock; 350,000 shares outstanding, $1 par $350,000
Paid in Capital Common Stock $4,900,000
Retained Earnings $4,000,000
Accumulated Other Comprehensive Income $750,000
Total Stockholders Equity $10,000,000
During the year, the company entered into the following transactions in this order:
- Repurchased 15,000 shares at a cost of $20 per share
- Sold 5,000 shares for $25 per share
- Declared a cash dividend of $.10 (ten cents) per share
- Net Income for the year was $100,000
Required: Prepare the Stockholders Equity section of the balance sheet at the end of the year under each of the following two methods:
- The company accounts for repurchased shares by retiring them.
- The company accounts for repurchased shares as Treasury Stock
Please prepare either Journal Entries or T-Accounts (or both) so that I can follow your work and award partial credit if necessary.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started