Answered: Shareholders’ Equity ($ in millions)…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

At December 31, 2020, the balance sheet of Meca International included the following shareholders' equity accounts:

Shareholders’ Equity	($ in millions)
Common stock, 70 million shares at $1 par	$	70
Paid-in capital—excess of par		420
Retained earnings		530

Required:
Assuming that Meca International views its share buybacks as treasury stock, record the appropriate journal entry for each of the following transactions: (If 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).)

On February 12, 2021, Meca reacquired 1 million common shares at $12 per share.
On June 9, 2022, Meca reacquired 2 million common shares at $9 per share.
On May 25, 2023, Meca sold 2 million treasury shares at $15 per share. Determine cost as the weighted-average cost of treasury shares.
For the previous transaction, assume Meca determines the cost of treasury shares by the FIFO method.

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