Question

Exercise 21-18 (Algo) Spreadsheet entries from statement of retained earnings [LO21-3, 21-4, 21-5, 21-6, 21-7, 21-8]

The statement of retained earnings of Gary Larson Publishers is presented below.

GARY LARSON PUBLISHERS Statement of Retained Earnings For the Year Ended December 31, 2021 ($ in millions)
Retained earnings, January 1		$	250
Add:	Net income		62
Deduct:	Cash dividend		(19	)
	Stock dividend (1 million shares of $1 par common stock)		(22	)
	Property dividend (Garfield Company preferred stock held as a short-term investment)		(18	)
	Sale of treasury stock (cost $40 million)		(8	)
Retained earnings, December 31		$	245

Required:
For the transactions that affected Larson’s retained earnings, reconstruct the journal entries that can be used to determine cash flows to be reported in a statement of cash flows. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

Answer:
Date / No.	Accounts Titles and Explanations	Debit (in $ )	Credit (in $ )
(a)	Income summary	$ 62
	Retained earnings		$ 62
	(To record the closing income Summary )
(b)	Retained earnings	$ 19
	Cash		$ 19
	(To record the Cash dividend )
(c )	Retained earnings	$ 22
	Common stock		$ 1
	Paid-in capital - in excess of par Common Stock   - Bal. Fig.		$ 21
	(To record the Stock dividend )
(d)	Retained earnings	$ 18
	Short-term investments		$ 18
	(To record the Property dividend )
(e)	Cash - Bal. Fig.	$ 32
	Retained earnings	$ 8
	Treasury stock		$ 40
	(To record the Sale of treasury shares )