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In: Accounting

The statement of retained earnings of Gary Larson Publishers is presented below. GARY LARSON PUBLISHERS Statement...

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 $ 290
Add: Net income 56
Deduct: Cash dividend (21 )
Stock dividend (1 million shares of $1 par common stock) (28 )
Property dividend (Garfield Company preferred stock held
as a short-term investment)		 (27 )
Sale of treasury stock (cost $62 million) (8 )
Retained earnings, December 31 $ 262


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).)

Record the closing entry of net income to retained earnings.

Record the payment of the cash dividend.

Record the issuance of the stock dividend.

Record the issuance of the property dividend.

Record the sale of treasury shares.

Solutions

Expert Solution

Answer
Account Title   Debit Credit
a
Income summary $ 56
         Retained earnings $ 56
Net income closed to retained earnings
b
Retained earnings $       21
       Cash $       21
Cash dividend
c
Retained earnings $       28
     Common stock $         1
     Paid-in capital - in excess of par $       27
Stock dividend
d
Retained earnings $       27
      Short-term investments $       27
Property dividend
e
Cash $       54
Retained earnings $         8
     Treasury stock $       62
Sale of treasury shares

ekkarill92 answered 2 years ago
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