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.

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.

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

Shareholders Equity Statement Common Stock 1600000 600000+100000 Additional Paid in Capital 89400000 Retained Earnings. 7700000 3200000+6000000-1500000 Treasury Stock -7500000 Total Shareholders Equity 91200000

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