Coronado Company has the following stockholders’ equity accounts at December 31,
ID: 2588941 • Letter: C
Question
Coronado Company has the following stockholders’ equity accounts at December 31, 2017.
Common Stock ($100 par value, authorized 7,900 shares) $483,500
Retained Earnings 307,400
a. Prepare entries in journal form to record the following transactions, which took place during 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
b. Prepare the stockholders’ equity section of Coronado Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2018 was $85,900. State law requires restriction of retained earnings for the amount of treasury stock. (Enter account name only and do not provide descriptive information.)
(1) 300 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $20 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $103 per share. (5) 450 shares of outstanding stock were purchased at $105 per share. (6) 320 of the shares purchased in (5) above were resold at $96 per share.Explanation / Answer
Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Treasury Stock Dr. 29,100 300 Shares X $97 To Cash 29,100 300 Shares X $97 (Record the purchase of Treasury Stock) 2 Retained Earnings Dr. 90,700 (4835 - 300) X $20 To Cash Dividends Payable 90,700 (4835 - 300) X $20 (Record The Cash Dividends declared) 3 Cash Dividends Payable Dr. 90,700 To Cash 90,700 (Record the cash dividends paid) 4 Cash Dr. 30,900 300 Shares X $103 To Treasury Stock 29,100 300 Shares X $97 To Paid in Capital in Excess of Par - Treasury 1,800 300 Shares X $6 (record the issue of treasury stock) 5 Treasury Stock Dr. 47,250 450 Shares X $105 To Cash 47,250 450 Shares X $105 (Record the purchase of Treasury Stock) 6 Cash Dr. 30,720 320 Shares X $96 Retained Earnings Dr. 2,880 320 Shares X ($105 - $96) To Treasury Stock 33,600 320 Shares X $105 (record the issue of treasury stock) Answer b Balance Sheet (Partial) As on Dec 31, 2018 Stockholders' Equity Common Stock, $100 Par, 7,900 Shares Autorized, 4,835 Shares issued & Oustanding 483,500 Paid in Capital in Excess of Par - Treasury 1,800 Total Paid in Capital 485,300 Retained Earnings 299,720 785,020 Less: Treasury Stock - 130 Shares (13,650) Total Stockholders' Equity 771,370 Statement of Retained Earnings As on Dec 31, 2018 Beginning Balance 307,400 Add: Net Income 85,900 Sub-total 393,300 Less: Cash Dividends (90,700) Less: Treasury Stock - Loss on Reissue (2,880) Ending Balance 299,720