A) Johnston, Inc., engaged in the following transactions involving treasury stock: Aug. 12 Purchased for cash 15,000 shares of treasury stock at a price of $23 per share.Dec 4 Reissued 5,000 shares of treasury stock at a price of $35 per share.June. 22 Reissued 3,500 shares of treasury stock at a price of $22 per share.Prepare general journal entries to record these transactions.Compute the amount of retained earnings that should be restricted because of the treasury stock still owned at June 30.Does a restriction on retained earnings affect the dollar amount of retained earnings reported in the balance sheet? Explain briefly. B) The common stock of Engro Corporation was trading at $145 per share on July 15, 2020. A year later, on July 15, 2021, it was trading at $210 per share. On this date, Engro’s board of directors decided to split the company’s common stock. If the company decides on a 2-for-1 split, at what price would you expect the stock to trade immediately after the split goes into effect?If the company decides on a 3-for-1 split, at what price would you expect the stock to trade immediately after the split goes into effect?Why do you think Engro’s board of directors decided to split the company’s stock? C). Engro, Inc., originally sold 100,000 shares of its $10 par value common stock at $25 per share.Several years later the company repurchased 10,000 of these shares at $55 per share. Melchercurrently holds those shares in treasury.Prepare the company’s stockholders’ equity section of the balance sheet to reflect this information.

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Answered: A) Johnston, Inc., engaged in the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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A) Johnston, Inc., engaged in the following transactions involving treasury stock:

Aug. 12 Purchased for cash 15,000 shares of treasury stock at a price of $23 per share.

Dec 4 Reissued 5,000 shares of treasury stock at a price of $35 per share.

June. 22 Reissued 3,500 shares of treasury stock at a price of $22 per share.

Prepare general journal entries to record these transactions.
Compute the amount of retained earnings that should be restricted because of the treasury stock still owned at June 30.
Does a restriction on retained earnings affect the dollar amount of retained earnings reported in the balance sheet? Explain briefly.

B) The common stock of Engro Corporation was trading at $145 per share on July 15, 2020. A year later, on July 15, 2021, it was trading at $210 per share. On this date, Engro’s board of directors decided to split the company’s common stock.
If the company decides on a 2-for-1 split, at what price would you expect the stock to trade immediately after the split goes into effect?
If the company decides on a 3-for-1 split, at what price would you expect the stock to trade immediately after the split goes into effect?
Why do you think Engro’s board of directors decided to split the company’s stock?

C). Engro, Inc., originally sold 100,000 shares of its $10 par value common stock at $25 per share.
Several years later the company repurchased 10,000 of these shares at $55 per share. Melcher
currently holds those shares in treasury.

Prepare the company’s stockholders’ equity section of the balance sheet to reflect this information.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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