Question

Pearl Company has the following stockholders' equity accounts at December 31, 2017. Common Stock ($100 par value, authorized 7,400 shares) Retained Earnings $463,300 323,200 Prepare entries in journal form to record the following transactions, which took place during 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) (1) 300 shares of outstanding stock were purchased at $97 per share. (These are to be accounted for using the cost method.) (2) A $18 per share cash dividend was declared. (3) The dividend declared in (2) above was paid. (4) The treasury shares purchased in (1) above were resold at $102 per share. (5) 550 shares of outstanding stock were purchased at $104 per share. (6) 310 of the shares purchased in (5) above were resold at $96 per share. No. Account Titles and Explanation Debit Credit 1. Treasury Stock Cash Retained Earnings Dividends Payable 3. Dividends Payable Cash

Answer 1

Answer Journal Entries credit Debit No. Account titles and Explanation $29100 $29100 Treasury Stock Cash (To record shares of outstanding Stock purchased) $ 127800 $127800 Retained Earnings Dividend payable (To record cash dividend declared) $127800 $127800 Dividend payable Cash & Cto record cash dividend declared was paid now)

$ 30600 Cash Treasury Stock paid in capital from Treasury Stock (To record Treasury stock tesold) $ 29100 $ 1500 $57200 5. Treasury Stock cash (To record Treasury Stock purchased $57200

Cash paidin capital from Treasury stock Retained earnings Treasury stock (To record Treasury stock were $29760 $ 1500 $ 980 $32240 resold

- prepare the stockholder's equity section of pearl company's balance sheet after giving effect to these transactions, assuming that not income for 2018 was $9730o. State law requires restriction of retained earnings for the amount of Treasury stock PEARL COMPANY Stock holder's Equity For the year ended December 31, 2018 Common Stock $463300 Retained Earnings* $194420 Total Assets $ 657720 lesso Treasury Stock $(24960) Total stock holder $632760 * If treasury stock resold at less than cost, Then Firstly such LOSS will be adjusted from paid in capital from Treasury stock. If any Excess loss remaining then sucn Excess Loss will be adjusted from existing balance of retained Earnings. Working Note ① Retained earning on Dec 31, 2018 opening Balance $323200 lesss Dividend paid $(127809) less: Loss on Tresury stock $ 1980) resoldre Retained Earnings on $194420 Dec 31, 2018

® Treasury stock on Dec 31, 2018 (550-310 Shares x $ 104 = $24960