The shareholders’ equity section of the balance sheet of TNL Systems Inc. includ
ID: 2454509 • Letter: T
Question
The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2015:
During 2016, 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 viewed as treasury stock. (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).)
Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2018, comparing the two approaches. Assume all net income earned in 2016–2018 was distributed to shareholders as cash dividends. (All lines in the table should be filled. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)
Shareholders' Equity ($ in millions) Common stock, 200 million shares at $1 par $ 200 Paid-in capital—excess of par 1,600 Paid-in capital—share repurchase 2 Retained earnings 1,000Explanation / Answer
Date Account Titles and transaction Debit ($ in million) Credit ($ in million) Feb 5, 2016 Treasury Stock (at cost) 96 Cash 96 (repurchase of 8 million shares @$12 persghare) July 9, 2016 Cash 42 Treasury Stck (at cost) 36 paid -in-capital -Share repurchase 6 (sale of 3 million shares repurchased @ $14 per share) Nov. 14, 2018 Cash 27 paid in capital -Share Repurchase 8 Retained Earnings 1 Treasury Stock 36 (sale of 3 million shares repurchased @ $9 per share) Shareholders' Equity $ in million Common stock, 200 million shares at $1 par 200 Paid-in capital—excess of par 1,600 Total Paid in Capital 1,800 Retained earnings 999 Total Equity before adjustment of treasury stock 2,799 Less: terasury stock (at cost) (2 million @$12) -24 Total Shareholders' Equity 2,775
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