Problem 15-6 Oriole Company has the following stockholders\' equity accounts at
ID: 2592131 • Letter: P
Question
Problem 15-6 Oriole Company has the following stockholders' equity accounts at December 31, 2017 Common Stock ($100 par value, authorized 7,900 shares) Retained Earnings $518,100 278,700 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.) 1280 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) 520 shares of outstanding stock were purchased at $106 per share. (6) 360 of the shares purchased in (5) above were resold at $96 per share. No. Account Titles and Explanation Debit Credit Prepare the stockholders equity section of Oriole Company's balance sheet after giving effect to these transactions, assuming that the net income for 2018 was $91,600. State law requires restriction of retained earnings for the amount of treasury stock. (Enter account name only and do not provide descriptive information.) ORIOLE COMPANYExplanation / Answer
Solution:
Part 1 – Journal Entries
No.
Account Titles and Explanation
Debit
Credit
1)
Treasury Stock (280 Shares x $97)
$27,160
Cash
$27,160
2)
Retained Earnings
$98,020
Cash Dividend Payable (4901 Shares x $ 20)
$98,020
(Number of Outstanding shares = (Issued Shares 518100/100 par value) - Treasury 280 Shares = 4,901 Shares
3)
Cash Dividend Payable
$98,020
Cash
$98,020
4)
Cash (280 Shares x $103)
$28,840
Treasury Stock (280 Shares x $97 at cost)
$27,160
Paid in Capital from Treasury Stock (Bal. figure)
$1,680
5)
Treasury Stock (520 Shares x $106)
$55,120
Cash
$55,120
6)
Cash (360 Shares x 96)
$34,560
Paid in Capital from Treasury Stock
$1,680
Retained Earnings (Bal. figure)
$1,920
Treasury Stock (360 Shares x $106 at cost)
$38,160
Part 2 – Stockholders’ Equity
Stockholders’ Equity
December 31, 2018
Common Stock
$518,100
Retained Earnings (278,700 - 98,020 - 1,920 + Net Income 91,600
$270,360
Total Paid in Capital and Retained Earnings
$788,460
Less:
Treasury Stock (520-360)share x 106)
$16,960
Total Stockholders' Equity
$771,500
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No.
Account Titles and Explanation
Debit
Credit
1)
Treasury Stock (280 Shares x $97)
$27,160
Cash
$27,160
2)
Retained Earnings
$98,020
Cash Dividend Payable (4901 Shares x $ 20)
$98,020
(Number of Outstanding shares = (Issued Shares 518100/100 par value) - Treasury 280 Shares = 4,901 Shares
3)
Cash Dividend Payable
$98,020
Cash
$98,020
4)
Cash (280 Shares x $103)
$28,840
Treasury Stock (280 Shares x $97 at cost)
$27,160
Paid in Capital from Treasury Stock (Bal. figure)
$1,680
5)
Treasury Stock (520 Shares x $106)
$55,120
Cash
$55,120
6)
Cash (360 Shares x 96)
$34,560
Paid in Capital from Treasury Stock
$1,680
Retained Earnings (Bal. figure)
$1,920
Treasury Stock (360 Shares x $106 at cost)
$38,160