(1) The shareholders\' equity section of Rodman Corporation as of December 31, 2

Question

(1) The shareholders' equity section of Rodman Corporation as of December 31, 2014, follows: S 80,000 Common stock Additional paid-in-capital (CS) 10,000 Retained earningsS 60,000 Total shareholders' equity $150,000 During 2015 the company entered into the following transactions: Purchased 1,000 shares of treasury stock for $60 per share As part of a compensation package, reissued half of the treasury stock to executives wh exercised the stock options for $20 per share Subsequent to transaction #2, reissued the remainder of the treasury stock on the open market for $66 per share 1. 2. 3. Provide the journal entries for each transaction and prepare the shareholders' equity section of the balance sheet as of December 31, 2015. Rodman Corp generated $20,000 in net income during 2015 and did not declare any dividends

Explanation / Answer

a. Journal Entries S. No. Account Tittle & Explanation Debit Credit 1 Treasury stock $60,000 Cash $60,000 To Record Purchase of treasury Stock 2 Cash $10,000 Retained earnings $20,000 Treasury stock $30,000 To Record Issuance of half Treasury Stock 3 Cash $33,000 Add. paid in capital, treasury stock $3,000 To Record Issuance of bal. Treasury Stock $30,000 Common stock $80,000 Additional paid-in capital, common stock $10,000 Additional paid in capital, treasury stock $3,000 Retained earnings $60,000 Total stockholders’ equity $153,000

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