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Accounting for Shareholders' Equity Transactions
The shareholders' equity section of the balance sheet of The Claremont Company appeared as follows at the end of the first year of operations:

Common stock, $0.08 par value	$480,000
Additional paid-in-capital	71,520,000
Retained earnings	25,600,000
Treasury stock	(6,000,000)
Shareholders' equity	$91,600,000

During the second year of operations, the following transactions occurred:

1. Generated net income of $4.8 million.
2. Paid a cash dividend of $1.2 million.
3. Purchased 100,000 shares of common stock at $7.6 per share.
4. Executed a 1-for-2 reverse stock split.

Prepare the shareholders' equity section of the balance sheet of Claremont Company at the end of the second year of operations.

Use a negative sign with treasury stock answer.

The Claremont Company Stockholders' Equity December 31, Year 2
Common stock, par value	$Answer
Additional paid-in-capital	Answer
Retained earnings	Answer
Treasury stock	Answer
Total shareholders' equity	$Answer

Answer 1

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The Claremont Company
Stockholders' Equity
December 31, Year 2
Common stock, par value		$        480,000
Additional paid-in-capital		$ 71,520,000
Retained earnings	Working-1	$ 29,200,000
Treasury stock		$   -6,760,000
Total shareholders' equity		$ 94,440,000
Working-1
Beginning Retained earning		$ 25,600,000
Add: Net Income		$     4,800,000
Less: Cash Dividend		$   -1,200,000
Ending Retained earning		$ 29,200,000
Working-2
Treasury Stock, Beginning		$   -6,000,000
Add: New 100,000*$7.6		$      -760,000
		$   -6,760,000