The shareholders’ equity section of the balance sheet of TNL Systems Inc. includ

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 (a) retired and (b) 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. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

      

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2015:

Explanation / Answer

1.

a. Retirement of shares purchased

Journal

b. Treasury:

2.

Stockholder's equity

No. Date Account Name Debit Credit a. Feb 5 Common stock (9 x $1) $9 Paid-in capital—excess of par (9 x $9) 81 Paid-in capital—share repurchase 2 Retained earnings 34 Cash $126 b. July 9 Cash (4 x $16) 64 Common stock (4 x $1) 4 Paid-in capital—excess of par 60 c. Nov 14 Cash (4 x $11) 44 Common stock (4 x $1) 4 Paid-in capital—excess of par 40

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