The shareholders\' equity section of the balance sheet of TNL Systems Inc. inclu
ID: 2535902 • Letter: T
Question
The shareholders' equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2017 Shareholders' Equity ($ in millions) $ 200 1,600 Common stock, 200 million shares at $1 par Paid-in capital-excess of par Paid-in capital-share repurchase Retained earnings 1,000 Required 1. During 2018, 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 (a) retired and (b) viewed as treasury stock a. On February 5, 2018, TNL Systems purchased 8 million shares at $12 per share b. On July 9, 2018, the corporation sold 3 million shares at $14 per share C. On November 14, 2020, the corporation sold 3 million shares at $9 per share 2. Prepare the shareholders' equity section of TNL Systems' balance sheet at December 31, 2020, comparing the two approaches Assume all net income earned in 2018-2020 was distributed to shareholders as cash dividends Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 2 Prepare the entries for both the purchase and subsequent resale for the above transactions of the shares assuming the shares are retired. (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).)Explanation / Answer
Req 1A: Retired
On February5, 2018, TNL systems purchased 8 million shares at $ 12 per share:
Common Stock (8 million shares at $ 1) $8 Dr
Paid in capital- excess of par (8 million shares at $ 8) $64 Dr
Paid in capital- Share repurchase $2Dr
Retained earnings $22Dr
Cash $96 Cr
On July 9 2018, the corporation sold 3 million shares at $ 14 per share:
Cash (3 million at $14)………………………………………………………………………………………………………. $42Dr.
Common Stock (3 million at $1)…………………………………………………………………………………………..$3 Cr
Paid-in capital- excess at par………………………………………………………………………………………………..$39Cr
On November 14, 2020, the corporation sold 3 million shares at $ 9 per share
Cash (3 million at $9)………………………………………………………………………………………………………. $27Dr.
Common Stock (3 million at $1)…………………………………………………………………………………………..$3 Cr
Paid-in capital- excess at par………………………………………………………………………………………………..$24Cr
Req 1B: Treasury
On February5, 2018, TNL systems purchased 8 million shares at $ 12 per share:
Treasury stock (8 million at $12)…………………………………………………………………………………… $96 Dr
Cash………………………………………………………………………………………………………………………………. $96 Cr
On July 9 2018, the corporation sold 3 million shares at $ 14 per share:
Cash (3 million at $14)………………………………………………………………………………………………………. $42Dr.
Treasury Stock (3 million at $12)…………………………………………………………………………………………$36 Cr
Paid-in capital- share repurchase………………………………………………………………………………………..$6 Cr
On November 14, 2020, the corporation sold 3 million shares at $ 9 per share
Cash (3 million at $9)………………………………………………………………………………………………………. $27Dr.
Paid in capital- share repurchase…………………………………………………………………………………….. $ 8 Dr
Retained earnings………………………………………………………………………………………………………….. $ 1 Dr
Treasury Stock (3 million at $12)…………………………………………………………………………………………$36 Cr
Req 2: Balance Sheet
Shareholder’s Equity
$ in million
Retirement
Treasury Stock
Paid in Capital:
Common Stock
$218
$200
Paid in capital- excess at par
$ 1599
$1600
Paid in capital- share repurchase
$0
$0
Retained earnings
$978
$999
Less: Treasury Stock( 2 million shares)
-
($20)
Total Shareholder’s equity
$2,779
$2,779
Shareholder’s Equity
$ in million
Retirement
Treasury Stock
Paid in Capital:
Common Stock
$218
$200
Paid in capital- excess at par
$ 1599
$1600
Paid in capital- share repurchase
$0
$0
Retained earnings
$978
$999
Less: Treasury Stock( 2 million shares)
-
($20)
Total Shareholder’s equity
$2,779
$2,779
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