The statement of retained earnings of Gary Larson Publishers is presented below.

Question

The statement of retained earnings of Gary Larson Publishers is presented below.

Required:
For the transactions that affected Larson’s retained earnings, reconstruct the journal entries for the transactions that affected retained earnings and that can be used to determine cash flows to be reported in a statement of cash flows. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

GARY LARSON PUBLISHERS
Statement of Retained Earnings
For the Year Ended December 31, 2018
($ in millions) Retained earnings, January 1 $ 225 Add: Net income 81 Deduct: Cash dividend (18 ) Stock dividend (1 million shares of $1 par common stock) (10 ) Property dividend (Garfield Company preferred stock held
as a short-term investment) (14 ) Sale of treasury stock (cost $56 million) (13 ) Retained earnings, December 31 $ 251

Explanation / Answer

a Income summary 225          Retained earnings 225 Net income closed to retained earnings b Retained earnings 18        Cash 18 Cash dividend c Retained earnings 10      Common stock 1      Paid-in capital - in excess of par 9 Stock dividend d Retained earnings 14       Short-term investments 14 Property dividend e Cash 43 Retained earnings 13      Treasury stock 56 Sale of treasury shares

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