Hawkeye Archery, Inc. showed the following balances in its general ledger as of

Question

Hawkeye Archery, Inc. showed the following balances in its general ledger as of December 31, 2015: Common Stock, $1 par value, 100,000 shares authorized,During 2016, Hawkeye entered into the following equity transactions: 1. Jan. 2: issuance of 8,000 shares of common stock for $33 per share 2. May 1: repurchase of 650 shares of common stock for $20,220. 3. June 30: repurchase of 500 treasury shares at $32 per share 4. Sept. 1: sale of 550 treasury shares at $30 per share. Hawkeye uses the weighted average method to determine the cost of treasury shares sold. 5. Dec. 15: declared and paid cash dividend of $29,000. Dividends have not been paid since Dec. 2013. 6. Net income for 2016 was $87,500. Required: a. Prepare the journal entries for the transactions 1-5 above. b. Determine the dividend paid on each common share in December 2016. c. Compute basic earnings per share for 2016. d. Prepare the shareholders' equity section of the balance sheet at both 12/31/2015 and 12/31/2016. e. Prepare the financing section of Hawkeye's statement of cash flow for the year ending December 31, 2016.

Explanation / Answer

Jan 2:

Dr Cash $264,000

Cr Common Stock $264,000

May 1

DrTreasury Stock = 20,220

Cr Cash 20,220

June 30

Treasury Stock 16,000

Cr Cash 16,000

Sept 1

Dr Cash 16,500

Dr Additional paid in capital 1788

Cr Treasury stock 18,288

Dec 15

Dr Reatined earnings(cash dividend declared ) = 29,000

Cr Dividend payable = 29,000

Dividend paid

Dr Dividend Payable = 29,000

Cr Cash = 29,000

b) Not possible

C) Basic EPS = (Net income -preferred dividend)/ Number of shares = (87500-500)/58600 = $1.41

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