(Solution) 18-2 The Shareholders' Equity Section Of The Balance Sheet Of TNL Systems Inc. Included The Following Accounts At December 31, 2010: Shareholders'... | Snapessays.com


(Solution) 18-2 The shareholders' equity section of the balance sheet of TNL systems Inc. included the following accounts at December 31, 2010: Shareholders'...


18-2

 

 

The shareholders’ equity section of the balance sheet of TNL systems Inc. included the following accounts at December 31, 2010:

 

 

 

Shareholders’ equity $ in Million

 

 

Common stock, 240 million shares at $1 pare $240

 

Paid-in-capital – excess of par 1,680

 

Paid-in capital – share repurchase 1

 

Retained earnings 1,100

 

 

 

Required:

 

 

1. During 2011, 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.

 

 

a. On February 5, 2011, TNL systems purchased 6 million shares at $10 per share

 

b. On July 9, 2011, the corporation sold 2 million shares at $12 per share

 

c. On November 14, 2013, the corporation sold 2 million shares at $7 per share

 

2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2013, comparing the two approaches. Assume all net income earned in 2011-2013 was distributed to shareholders as cash dividends.18-2

 

The shareholders’ equity section of the balance sheet of TNL systems Inc. included the

 

following accounts at December 31, 2010:

 

Shareholders’ equity

 

$ in Million

 

Common stock, 240 million shares at $1 pare

 

$240

 

Paid-in-capital – excess of par

 

1,680

 

Paid-in capital – share repurchase

 

1

 

Retained earnings

 

1,100

 

Required:

 

1.

 

During 2011, 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.

 

a.

 

On February 5, 2011, TNL systems purchased 6 million shares at $10 per

 

share

 

b.

 

On July 9, 2011, the corporation sold 2 million shares at $12 per share

 

c.

 

On November 14, 2013, the corporation sold 2 million shares at $7 per share

 

2.

 

Prepare the shareholders’ equity section of TNL Systems’ balance sheet at

 

December 31, 2013, comparing the two approaches.

 

Assume all

 

net income

 

earned in 2011-2013 was distributed to shareholders as cash dividends.

 


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This question was answered on: May 23, 2022

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