Accounting for Share Transactions The shareholders' equity section of the consolidated balance sheet of Wilson Industries...

Accounting for Share Transactions
The shareholders' equity section of the consolidated balance sheet of Wilson Industries appeared as follows at the beginning of the year:

Shareholders' Equity
Class A common stock, $0.02 par value; 20,000,000 shares authorized;
6,100,000 shares issued	$122,000
Additional paid-in-capital	236,254,000
Retained earnings	28,540,000
Currency translation adjustment	(4,824,000)
Total equity	$260,092,000

The following events occurred sequentially during the year:

A 2-for-1 forward stock split was executed.
A ten percent stock dividend was distributed when the Wilson share price was $40 per share.
Treasury stock valued at $6,000,000 was repurchased when the Wilson share price was $25 per share.

Required

1. How many Class A common shares are outstanding following the above events?

Answer

2. What is the par value per share of the Class A common stock following the above events? Round to the nearest three decimal places.

$Answer

3. Prepare a spreadsheet to illustrate the financial effects associated with the above three share transactions.

Use a negative sign with answers to indicate a reduction in an account balance and with treasury stock repurchase and balance.

Wilson Industries
Transaction	Stock Split	Stock Dividend	Share Repurchase	Balance Sheet Totals
Assets
Cash	$Answer	$Answer	$Answer	$Answer
Shareholders' Equity
Common stock	Answer	Answer	Answer	Answer
APIC	Answer	Answer	Answer	Answer
Retained earnings	Answer	Answer	Answer	Answer
Treasury stock	Answer	Answer	Answer	Answer
Total Shareholders' Equity				$Answer

4. Calculate the total value of shareholders' equity following the above events.

$Answer

Solutions

Expert Solution

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Part 1

Beginning outstanding shares		6,100,000
2 for 1 Split		12,200,000
No of Shares outstanding after split		18,300,000
Add: 10% of Stock Dividend		1,830,000
Less: Treasury stock	$6,000,000/$25	-240,000
Class A Common Shares Outstanding		19,890,000

Part 2

Par Value after Split	$0.02/2	$ 0.01

Part 3


Wilson Industries
				Balance
Transaction	Stock	Stock	Share	Sheet
	Split	Dividend	Repurchase	Totals
Assets
Cash			$ -6,000,000	$ -6,000,000
Shareholders' Equity:
Common stock		$ 18,300		$ 18,300
APIC		$ 73,181,700		$ 73,181,700
Retained earnings		$ -73,200,000		$-73,200,000
Treasury stock			$ -6,000,000	$ -6,000,000
Total Shareholders' Equity	$ -	$ -	$ -6,000,000	$ -6,000,000

Part 4

Equity Beginning		$ 260,092,000
Less: Period Transaction (From Part 3)		$ -6,000,000
		$ 254,092,000

ekkarill92 answered 4 months ago

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