During 2021, 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.
During 2021, 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The shareholders’ equity section of the
Shareholders' Equity | ($ in millions) | ||
Common stock, 340 million shares at $1 par | $340 | ||
Paid-in capital—excess of par | 2,720 | ||
Paid-in capital—share repurchase | 1 | ||
2,400 | |||
Required:
1. During 2021, 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
- On February 5, 2021.Record the purchase of 8 million shares at $12 per share assuming the shares are retired.
- On July 9, 2021, Record the sale of 2 million shares at $14 per share.
- On November 14, 2023, Record the sale of 2 million shares at $9 per share
Record the purchase of 8 million shares at $12 per share assuming the shares are viewed as treasury stock.
2. Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2023, comparing the two approaches. Assume all net income earned in 2021–2023 was distributed to shareholders as cash dividends.
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