3 The shareholders\' equity section of the balance sheet of TNL Systems Inc. inc

Question

3

The shareholders' equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2015: (S in millions) 230 1,840 Shareholders' Equity Common stock, 230 million shares at $1 par Paid-in capital-excess of par Paid-in capital-share repurchase Retained earnings 1,400 Required 1. 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. (f 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).) a. On February 5, 2016, TNL Systems purchased 6 million shares at $11 per share. b. On July 9, 2016, the corporation sold 2 million shares at $13 per share. c. On November 14, 2018, the corporation sold 2 million shares at $8 per share.

Explanation / Answer

Journal entries considering the purchase of shares for retirement a. (i).To record purchase fo 6 million shares @$11 per share Date Acount Title Debit Credit Feb.5, 2016 Treasury stock 66 Cash 66 a. (ii).To record retirement of 6million shares pruchased above Date Acount Title Debit Credit Feb.5, 2016 Common stock 6 Paid in capital - excess of par 48 Retained earnings 12 Treasury stock 66 (b). To record sale of 2million shares @$13 per share. Date Acount Title Debit Credit July.9, 2016 Cash 26 Common stock 2 Paid in capital - excess of par 24 (c). To record sale of 2million shares @$8 per share. Date Acount Title Debit Credit Nov.14, 2018 Cash 16 Common stock 2 Paid in capital - excess of par 14 Journal entries considering the purchase of shares for reissue a.To record purchase fo 6 million shares @$11 per share Date Acount Title Debit Credit Feb.5, 2016 Treasury stock 66 Cash 66 (b). To record sale of 2million shares @$13 per share. Date Acount Title Debit Credit July.9, 2016 Cash 26 Treasury stock 22 Paid in capital - share repurchase 4 (c). To record sale of 2 million shares @$8 per share. Date Acount Title Debit Credit Nov.14, 2018 Cash 16 Paid in capital - share repurchase 6 treasury stock 22 Shareholders' Equity $ in millions Retirement Treasury stock Common stock, 228 million shares , $1 par 228 Common stock 230 million shares, $1 par 230 Paid in capital - in excess of par 1830 1840 Paid in capital - share repurchase 1 -1 Retained earnings 1388 1400 Treasury stock - 2 million shares -22 3447 3447

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