The shareholders’ equity section of the balance sheet of TNL Systems Inc. includ

Question

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2015:

During 2016, TNL Systems reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of the shares assuming the shares are (a) retired and (b) viewed as treasury stock. (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).)

Prepare the shareholders’ equity section of TNL Systems’ balance sheet at December 31, 2018, comparing the two approaches. Assume all net income earned in 2016–2018 was distributed to shareholders as cash dividends. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

The shareholders’ equity section of the balance sheet of TNL Systems Inc. included the following accounts at December 31, 2015:

Explanation / Answer

GENERAL JOURNAL Date Account title and explanation Debit Credit February 5, 2016 Treasury stock $        96,000,000 Cash $       96,000,000 (8000000*12) (To record purchase of treasury stock) July9, 2016 Cash $        42,000,000 (3000000*14) Treasury stock $       36,000,000 (3000000*12) Additional paid in capital $          6,000,000 (42000000-36000000) (To record resell of treasury stock) November14,2018 Cash $        27,000,000 (3000000*9) Discount on capital $          9,000,000 (36000000-27000000) Treasury stock $       36,000,000 (3000000*12) (To record resell of treasury stock) JOURNAL ENTRY FOR RETIREMENT OF TREASURY STOCK July9, 2016 Common stock $3,000,000 (3000000*$1) Common stock-paid -in-capital $        24,000,000 (2080/260)*3000000 Retained earning $          9,000,000 (36000000-24000000-3000000) Treasury stock $       36,000,000 (3000000*12) (To record retirement of treasury stock) November14,2018 Common stock $3,000,000 (3000000*$1) Common stock-paid -in-capital $        24,000,000 (2080/260)*3000000 Retained earning $          9,000,000 (36000000-24000000-3000000) Treasury stock $       36,000,000 (3000000*12) (To record retirement of treasury stock)

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