Need help on E10-22A and E10-23A (Learning Objectives 2, 3, 4: Account for issua

Question

Need help on E10-22A and E10-23A (Learning Objectives 2, 3, 4: Account for issuance of stock; show how treasury stock affects a company; account for dividends) Al December 31, 2014, Harelik Corporation reported the stockholders*equity accounts shown here (with dollar amounts in millions, except per-share amounts). Common stock $1.50 par value per share, 2,400 million shares issued $ 3,600 Paid-in capital in excess of par value 7,200 Retained earnings 1,490 Treasury stock, at cost (85) Total stockholders' equity $12,205 Hareliks 2015 transactions included Net income, $ 380 million Issuance of 18 million shares of common stock for $12.00 per share Purchase ot 8 million shares of treasury stock for $120 million Sold 5 million of the treasury shares purchased in part c for $80 million Declaration and payment of cash dividends of $24 million Requirements Journalize Hareliks transactions in parts b, c, d, and c. Explanations arc not required. What was the overall effect of these transactions (parts a through e) on Hareliks stockholders' equity? (Learning Objective 6: Report stockholders' equity after a sequence of transactions) Use the Harelik Corporation data in E10-22A to prepare the stockholders'equity section of company's balance sheet at December 31,2015.

Explanation / Answer

E10-22A :

a)   Profit and Loss Account ( Net Income) Dr. $380000000

   To Retained Earning $380000000

   (Being Income transfered to Retained Earning)

b) Cash Dr. $216000000

   To Common stock(18000000shares * $12) $27000000

   To Additional paid in capital in excess of par(18000000 * $10.5) $189000000

(Being common stock issued at excess of par)

c) Treasury stock Dr. $120000000

To cash $120000000

(Being Treasury stock purchased)

d) Cash Dr. $80000000

To Treasury Stock(5000000shres * $15) $75000000

   To Additional Paid in Capital(5000000shares * $1) $5000000

(Being treasury stock resold)

Note:-   Treasury stock purchased { $120000000 / 8000000 shares) = $15 per share

   Sold it For $80000000 / 5000000 = $16 per share

e) Retained Earning Dr. $24000000

To Dividend Payable $24000000

(being Dividend Declared and Due)

Dividend payable Dr. $24000000

To Cash $24000000

( Being Dividend paid)

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