Exercise 4-3 Stockholders’ equity in TransWorld Inc. on December 31, 2010, is shown below: Common stock:...

Exercise 4-3

Stockholders’ equity in TransWorld Inc. on December 31, 2010, is shown below:

Common stock: 60,000 authorized shares, par value of $15, 25,000 shares issued and outstanding	$375,000
Paid-in capital in excess of par value, common stock	90,000
Retained earnings	430,000
Total Equity	895,000

Stockholder equity accounts were affected by the following transactions in 2011:

Jan 1   TransWorld purchased 2,000 treasury shares at $24/share.
Jan 7   Declared a $3/share dividend, payable on Feb 15 to the Feb 28 stockholders of record.
Feb 15   Paid the dividend (Jan 7 declaration).
May 7   Sold 800 of treasury shares for cash at $27/share.
Aug 15   Sold 1200 of treasury shares for cash at $21/share.
Sep 20   Declared a $3/share dividend, payable on Oct 15 to the Sep 30 stockholders of record.
Oct 15   Paid the dividend (Sep 20 declaration).
Dec 31   Closed the credit balance of $188,000 (from net income) in the Retained Earnings Income Summary account.

1.   Use the information provided to prepare the following:

a.   Journal entries for the 2011 transactions.
b.   December 31, 2011, retained earnings statement.
c.   For distinguished performance, prepare the investors’ equity section of TransWorld’s December 31, 2011, balance sheet.

Expert Solution

ekkarill92 answered 3 years ago

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