Chapter 11, Problem 2PSB

1.

To determine

Introduction

Treasury stock: Treasury stock is the corporation’s own stock which is purchased by the corporation having idle funds or when the market value of the stock is favourable. The Treasury stock is purchased with the view to reissued them or for the purpose of redemption of common stock.

Journal entries for the purchase and reissue of treasury stock and dividend distribution.

2.

To determine

Introduction:

Retained earnings: Retained earnings is the accumulated balance of all the earnings made during the past years of the corporation which is left after being paid the dividend of the respective years. These are the residual incomes left over the years after distribution to stockholders.

Balance of retained earnings for the balance sheet.

3.

To determine

Introduction

Stockholder’s equity: Stockholder’s equity states the amount of claim of the stockholders of the corporation in the total asset of the corporation. It represents the claim of the owners over the total assets of the business.

Stockholder’s equity section of the balance sheet after the stock dividend is distributed.