
Introduction:
Treasury Stocks are the stocks which are those numbers of issued stocks which are repurchased by the corporation. In other words,
Requirement 1
To Determine:

Answer to Problem 2BPSB
Solution:
Date | Particulars | Debit | Credit |
Jan.1 | Treasury Stock, $12 par value | 480,000 | |
Cash | 480,000 | ||
(40,000 Common Stock repurchased at $12) | |||
Jan.5 | 240,000 | ||
Dividend Payable | 240,000 | ||
(Cash Dividend of $1.5 on each outstanding share declared) | |||
Feb.28 | Dividend Payable | 240,000 | |
Cash | 240,000 | ||
(Cash Dividend paid) | |||
July.6 | Cash | 312,000 | |
Additional paid-in-capital | 24,000 | ||
Treasury Stock | 288,000 | ||
(Treasury stock sold out above cost) | |||
Aug.22 | Cash | 152,000 | |
Additional Paid-in-Capital- Treasury Stock | 24,000 | ||
Retained Earnings | 16,000 | ||
Treasury Stock | 192,000 | ||
(Treasury Stock sold out below cost) | |||
Sep.5 | Retained Earnings | 500,000 | |
Dividend Payable | 500,000 | ||
(Cash Dividend declared) | |||
Oct.28 | Dividend Payable | 500,000 | |
Cash | 500,000 | ||
(Cash Dividend paid) | |||
Dec.31 | Income Summary | 1,072,000 | |
Retained Earnings | 1,072,000 | ||
(Credit balance of net income transferred to retained earnings) |
Explanation of Solution
Explanations:
1. Calculation of Cash Dividend declared on Jan.5:
2. Calculation of Cash Dividend declared on Sep.5:
Requirement 2:
To Calculate:
Ending Balance of Retained Earnings

Answer to Problem 2BPSB
Solution:
Balthus Corporation
Statement of Retained Earnings
For the year ended 31st Dec. 2017
Particulars | Amount ($) |
Retained Earnings on December 31, 2016 | 2,160,000 |
Net Income for the year ended Dec.31, 2017 | 1,072,000 |
Dividend paid to Shareholders | (740,000) |
Treasury Stock reissuances | (16,000) |
Retained Earnings at Dec.31, 2017 | 2,476,000 |
Explanation of Solution
Explanations:
The statement of retained earnings shows the changes in retained earnings during an accounting year. It generally starts with an opening balance of retained earnings and then different items of income and expenses are added and subtracted to arrive at the closing balance of retained earnings for the said accounting year. This can be calculated as follows:
Requirement 3:
To Calculate:

Answer to Problem 2BPSB
Solution:
Total Stockholders’ Equity at the year-end is $4,076,000
Explanation of Solution
Explanations:
Common stock- $10 par value, 100,000 shares authorized | |
40,000 shares issued and outstanding | $200,000 |
Paid-in-Capital in excess of par value, common stock | 1,400,000 |
Retained Earnings | 2,476,000 |
Total Stockholders’ Equity | 4,076,000 |
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