Accounting for Shareholders’ Equity Transactions The shareholders’ equity sectio

Question

Accounting for Shareholders’ Equity Transactions
The shareholders’ equity section of the balance sheet of The Claremont Company appeared as follows at the end of the first year of operations:

During the second year of operations, the following transactions occurred:

1. Generated net income of $6 million.

2. Paid a cash dividend of $1.5 million.

3. Purchased 100,000 shares of common stock at $9.5 per share.

4. Executed a 1-for-2 reverse stock split.

Prepare the shareholders’ equity section of the balance sheet of Claremont Company at the end of the second year of operations. Please show all work.

Accounting for Shareholders’ Equity Transactions
The shareholders’ equity section of the balance sheet of The Claremont Company appeared as follows at the end of the first year of operations:

Common stock, $0.1 par value $600,000 Additional paid-in-capital 89,400,000 Retained earnings 32,000,000 Treasury stock (7,500,000) Shareholders’ equity $114,500,000

During the second year of operations, the following transactions occurred:

1. Generated net income of $6 million.

2. Paid a cash dividend of $1.5 million.

3. Purchased 100,000 shares of common stock at $9.5 per share.

4. Executed a 1-for-2 reverse stock split.

Prepare the shareholders’ equity section of the balance sheet of Claremont Company at the end of the second year of operations. Please show all work.

The Claremont Company
Stockholders’ Equity
December 31, Year 2 Common stock, par value $Answer Additional paid-in-capital Answer Retained earnings Answer Treasury stock Answer Total shareholders’ equity $Answer

Explanation / Answer

The Claremont Company JV entry for Transactions Account Dr $ Cr $ 1 Income Statemet        6,000,000 Reatined earning    6,000,000 2 Dividend Payable        1,500,000 Retained Earning    1,500,000 Cash    1,500,000 Dividend Payable        1,500,000 3 Treasury Stock            950,000 Cash       950,000 ( cost method used for share purchase) Shareholders'Equity section after the second year of opearation Amt $ Common Stock (0.20 par value)            600,000 Additional -paid-in Capital      89,400,000 Retained Earning      36,500,000 Treasury Stock      (8,450,000) Shareholders'Equity    118,050,000

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.