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.

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ekkarill92 answered 1 year ago

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