At the beginning of 2021, Thompson Service, Inc., showed the following amounts in the stockholders' equity section of its balance sheet. Stockholders' equity: Capital stock, $1 par value, 500,000 shares authorized, 382,000 issued and outstanding Additional paid-in capital: capital stock Total paid-in capital Retained earnings Total stockholders' equity 382,e00 4, 202,000 $44,584,000 2,704, 600 $ 7,288, 600 The transactions relating to stockholders' equity during the year are as follows. 3 Declared a dividend of $1 per share to stockholders of record on January 31, payable on February 15. Jan. Feb. 15 Paid the cash dividend declared on January 3. Apr. 12 The corporation purchased 6,000 shares of its own capital stock at a price of $40 per share. May 9 Reissued 4,000 shares of the treasury stock at a price of $44 per share. 1 Declared a 5 percent stock dividend to stockholders of record at June 15, to be distributed on June 30. The market price of the stock at June 1 was $42 per share. (The 2,000 shares remaining in the treasury do not participate in the stock dividend.) June June 30 Distributed the stock dividend declared on June 1 Aug. 4 Reissued 600 of the 2,000 remaining shares of treasury stock at a price of $37 per share. Dec 31 The Tncome
At the beginning of 2021, Thompson Service, Inc., showed the following amounts in the stockholders' equity section of its balance sheet. Stockholders' equity: Capital stock, $1 par value, 500,000 shares authorized, 382,000 issued and outstanding Additional paid-in capital: capital stock Total paid-in capital Retained earnings Total stockholders' equity 382,e00 4, 202,000 $44,584,000 2,704, 600 $ 7,288, 600 The transactions relating to stockholders' equity during the year are as follows. 3 Declared a dividend of $1 per share to stockholders of record on January 31, payable on February 15. Jan. Feb. 15 Paid the cash dividend declared on January 3. Apr. 12 The corporation purchased 6,000 shares of its own capital stock at a price of $40 per share. May 9 Reissued 4,000 shares of the treasury stock at a price of $44 per share. 1 Declared a 5 percent stock dividend to stockholders of record at June 15, to be distributed on June 30. The market price of the stock at June 1 was $42 per share. (The 2,000 shares remaining in the treasury do not participate in the stock dividend.) June June 30 Distributed the stock dividend declared on June 1 Aug. 4 Reissued 600 of the 2,000 remaining shares of treasury stock at a price of $37 per share. Dec 31 The Tncome
Chapter1: Financial Statements And Business Decisions
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Prepare the stockholders' equity section of the balance sheet at December 31, 2021. Include a
your computation of retained earnings at that date.
THOMPSON SERVICE INC.
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Partial Balance Sheet
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December 31, 2021
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Stockholders' equity:
Additional paid-in capital:
Total paid-in capital
三
$4
Total stockholders' equity
$:
0.
Computation of retained earnings at Dec. 31, 2021:
Retained earnings at beginning of year
Subtotal
0.
$4
0.
Retained earnings, Dec. 31, 2021
$4
0.
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At the beginning of 2021, Thompson Service, Inc., showed the following amounts in the stockholders' equity section of its balance
sheet.
Stockholders' equity:
Capital stock, $1 par value, 500,000 shares authorized,
382,000 issued and outstanding
Additional paid-in capital: capital stock
Total paid-in capital
Retained earnings
Total stockholders' equity-
382,000
4,202,000
$ 4,584,000
2,704,600
$7,288,600
ok
The transactions relating to stockholders' equity during the year are as follows.
Jan.
3 Declared a dividend of $1 pes share to stockholders of record on January 31, payable on February 15.
Feb. 15 Paid the cash dividend declared on January 3.
Apr. 12 The corporation purchased 6,000 shares of its own capital stock at a price of $40 per share.
nt,
May 9 Reissued 4,000 shares of the treasury stock at a price of $44 per share.
1 Declared a 5 percent stock dividend to stockholders of record at June 15, to be distributed on June 3o. The market price of
the stock at June 1 was $42 per share. (The 2,000 shares remaining in the treasury do not participate in the stock
dividend.)
June
ences
June 30 Distributed the stock dividend declared on June 1
Aug. 4 Reissued 600 of the 2,000 remaining shares of treasury stock at a price of $37 per share.
Dec. 31 The Income Summary account, showing net income for the year of $1,928,000, was closed into the Retained Earnings account.
Dec. 31 The $382,000 balance in the Dividends account was closed into the Retained Earnings account.
Required:
a. Prepare in general journal form the entries to record the above transactions.
b. Prepare the stockholders' equity section of the balance sheet at December 31, 2021. Include a supporting schedule showing your
computation of retained earnings at that date.
c. Compute the maximum cash dividend per share that legally could be declared at December 31, 2021, without impairing the paid-in
capital of Thompson Service. (Hint: The availability of retained earnings for dividends is restricted by the cost of treasury stock owned.)
Complete this question by entering your answers in the tabs below.
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Required B
Required C
Prepare the stockholders' equity section of the balance sheet at December 31, 2021. Include a supporting schedule showing
your computation of retained earnings at that date.
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Step 1 : Introduction
A Balance Sheet is an important part of Accounting as it reflects a company's side whether it is in profit or loss.It consists of liabilities and assets.
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