Question
In: Accounting
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2020:
Shareholders' Equity ($ in millions)
Common stock, 260 million shares at $1 par $ 260
Paid-in capital—excess of par 2,080
Paid-in capital—share repurchase 2
Retained earnings 1,600
Required:
1. During 2021, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock.
On February 5, 2021, TNL Systems purchased 8 million shares at $12 per share.
On July 9, 2021, the corporation sold 3 million shares at $14 per share.
On November 14, 2023, the corporation sold 3 million shares at $9 per share.
2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2023, comparing the two approaches. Assume all net income earned in 2021–2023 was distributed to shareholders as cash dividends.
Prepare the entries for both the purchase and subsequent resale for the above transactions of the shares assuming the shares are retired. (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).)
| No | Date | General Journal | Debit | Credit |
|---|---|---|---|---|
| A | February 05, 2021 | Treasury stockselected answer incorrect | 96 incorrect | |
| Cashselected answer incorrect | 96 incorrect | |||
| B | July 09, 2021 | No Transaction Recorded | ||
| C | November 14, 2023 | No Transaction Recorded |
Solutions
Expert Solution
| (1A Journal Entries): | Amount in Millions | ||
| Date | Account Titles And Explanation | Debit | Credit |
| 15-Feb-21 | |||
| Retired | Common stock (8 Million shares x $1 par) | $ 8.00 | |
| Paid-in capital—excess of par (8 Million shares x $8) | $ 64.00 | ||
| Retained earnings (difference) | $ 22.00 | ||
| Paid-in capital—share repurchase | $ 2.00 | ||
| Cash (8 Million Shares x $12) | $ 96.00 | ||
| Average paid-in capital-excess of par is $8 per share ($2080 ÷ 260 shares) | |||
| 9-Jul-21 | Cash (3 Million Shares x $14) | $ 42.00 | |
| Common stock (3 Million shares x $1 par) | 3 | ||
| Paid-in capital—excess of par (difference) | $ 39.00 | ||
| 14-Nov-23 | Cash (3 Million Shares x $9) | $ 27.00 | |
| Common stock (3 Million shares x $1 par) | 3 | ||
| Paid-in capital—excess of par (difference) | $ 24.00 | ||
| (1B Journal Entries): | |||
| Accounted for as treasury stock | |||
| 15-Feb-21 | Treasury stock (8 million shares x $12) | $ 96.00 | |
| Cash (8 Million Shares x $12) | $ 96.00 | ||
| 9-Jul-21 | Cash (3 Million Shares x $14) | $ 42.00 | |
| Paid-in capital—sh. Repurchase | $ 6.00 | ||
| Treasury stock (3 million shares x $12) | $ 36.00 | ||
| Nov 14, 2020 | Cash (3 Million Shares x $9) | $ 27.00 | |
| Paid-in capital—sh. Repurchase (2+6) | $ 8.00 | ||
| Retained Earnings | $ 1.00 | ||
| Treasury stock (3 million shares x $12) | $ 36.00 | ||
| 2) | Amount in Millions | ||
| SHARES RETIRED | TREASURY STOCK | ||
| Paid-in capital: | |||
| Common stock, $1 par (260 - 8 + 3 + 3) Million | $ 258.00 | $ 260.00 | |
| Paid-in capital—excess of par (2080 - 64 + 39 + 24) | $ 2,079.00 | $ 2,080.00 | |
| Paid-in capital—share repurchase | $ - | $ - | |
| Retained earnings (1600 -22) | $ 1,578.00 | $ 1,599.00 | |
| Less: treasury stock, $2 m shares x $12 (at cost) | $ (24.00) | ||
| Total shareholders’ equity | $ 3,915.00 | $ 3,915.00 | |
ekkarill92 answered 1 year agoRelated Solutions
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
Shareholders'
Equity
($
in millions)
Common stock, 310
million shares at $1 par
$
310
Paid-in capital—excess of
par
2,790
Paid-in capital—share
repurchase
1
Retained earnings
2,100
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31, 2020:
Shareholders' Equity ($ in millions) Common stock, 400 million
shares at $1 par $ 400 Paid-in capital—excess of par 3,200 Paid-in
capital—share repurchase 1 Retained earnings 3,000 Required: 1.
During 2021, TNL Systems reacquired shares of its common stock and
later sold shares in two separate transactions. Prepare the entries
for both the purchase and subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2020:
Shareholders' Equity
($ in millions)
Common stock, 270 million shares at $1 par
$
270
Paid-in capital—excess of par
1,890
Paid-in capital—share repurchase
2
Retained earnings
1,700
Required:
1. During 2021, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31,
2017:
Shareholders'
Equity
($
in millions)
Common stock, 380
million shares at $1 par
$
380
Paid-in capital—excess of
par
3,040
Paid-in capital—share
repurchase
1
Retained earnings
2,800
Required:
1. During 2018, TNL Systems reacquired shares of
its common stock and later sold shares in two separate
transactions. Prepare the entries for both the purchase and
subsequent resale of the shares...
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts...
The shareholders’ equity section of the balance sheet of TNL
Systems Inc. included the following accounts at December 31, 2017:
Shareholders' Equity ($ in millions) Common stock, 300 million
shares at $1 par $ 300 Paid-in capital—excess of par 2,400 Paid-in
capital—share repurchase 2 Retained earnings 2,000 Required: 1.
During 2018, TNL Systems reacquired shares of its common stock and
later sold shares in two separate transactions. Prepare the entries
for both the purchase and subsequent resale of the shares...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 8.5%, 94,000
shares at $1 par
$
94,000
Common stock, 444,400 shares at
$1 par
444,400
Paid-in capital—excess of par,
preferred
1,555,000
Paid-in capital—excess of par,
common
2,605,000
Retained earnings
9,345,000
Treasury stock, at cost; 4,400
common shares
(44,000
)
Total shareholders' equity
$
13,999,400
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in
capital:
Preferred stock, 7.5%, 82,000
shares at $1 par
$
82,000
Common stock, 323,200 shares at
$1 par
323,200
Paid-in capital—excess of par,
preferred
1,445,000
Paid-in capital—excess of par,
common
2,495,000
Retained earnings
8,245,000
Treasury stock, at cost; 3,200
common shares
(38,400
)
Total shareholders' equity
$
12,551,800
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31, 2017:
Paid-in capital: Preferred stock, 7.0%, 91,000 shares at $1 par $
91,000 Common stock, 414,100 shares at $1 par 414,100 Paid-in
capital—excess of par, preferred 1,525,000 Paid-in capital—excess
of par, common 2,575,000 Retained earnings 9,045,000 Treasury
stock, at cost; 4,100 common shares (41,000 ) Total shareholders'
equity $ 13,609,100 During 2018, several events and transactions
affected the retained earnings of Consolidated Paper. Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31,
2017:
Paid-in capital:
Preferred stock, 8.0%, 85,000 shares at $1 par
$
85,000
Common stock, 353,500 shares at $1 par
353,500
Paid-in capital—excess of par, preferred
1,475,000
Paid-in capital—excess of par, common
2,525,000
Retained earnings
8,545,000
Treasury stock, at cost; 3,500 common shares
(38,500
)
Total shareholders' equity
$
12,945,000
During 2018, several events and transactions affected the retained
earnings of Consolidated Paper.
Required:...
The balance sheet of Consolidated Paper, Inc., included the following shareholders’ equity accounts at December 31,...
The balance sheet of Consolidated Paper, Inc., included the
following shareholders’ equity accounts at December 31, 2015:
Paid-in capital:
Preferred stock, 8.8%,
90,000 shares at $1 par
$
90,000
Common stock, 364,000
shares at $1 par
364,000
Paid-in capital—excess of
par, preferred
1,437,000
Paid-in capital—excess of
par, common
2,574,000
Retained earnings
9,735,000
Treasury stock, at cost; 4,000 common shares
(44,000
)
Total shareholders' equity
$
14,156,000
During 2016, several events and transactions affected the
retained earnings of Consolidated Paper.
Required:...
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