Question

The shareholders' equity section of the balance sheet of TNL Systems Inc, included the following accounts at December 31, 2020: Shareholders' Equity Common stock, 290 million shares at $l par Paid-in capital-excess of par Paid-in capital-share repurchase Retained earnings ($ in millions) $ 290 2,030 1,900 Required: 1. During 2021, 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 a. On February 5, 2021, TNL Systems purchased 9 million shares at $10 per share. b. On July 9, 2021, the corporation sold 3 million shares at $12 per share. c. On November 14, 2023, the corporation sold 3 million shares at $7 per share. 2. Prepare the shareholders' equity section of TNL Systems' balance sheet at December 31, 2023, comparing the two approaches. Assume all net income earned in 2021-2023 was distributed to shareholders as cash dividends. Complete this question by entering your answers in the tabs below. Reg 1 Retired Reg Treasury Stock Reg 2 Prepare the entries for both the purchase and subsequent resale for the above transactions of the shares assuming the shares are 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 (l.e., 10,000,000 should be entered as 10).) View transaction list

Answer 1

1A. Retirement:

No	Date	General Journal	Debit	Credit
1	February 05, 2021	Common stock (9m x $1)	9
		Paid-in capital-excess of par ($2030 x 9/290)	63
		Paid-in capital-share purchase	1
		Retained earnings (plug)	17
		Cash (9m x $10)		90
		(To record purchase and retirement of common stock)
2	July 09, 2021	Cash (3m x $12)	36
		Common stock (3m x $1)		3
		Paid-in capital-excess of par		33
		(To record issuance of common stock)
3	November 14, 2023	Cash (3m x $7)	21
		Common stock (3m x $1)		3
		Paid-in capital-excess of par		18
		(To record issuance of common stock)

1B. Treasury stock:

No	Date	General Journal	Debit	Credit
1	February 05, 2021	Treasury stock	90
		Cash (9m x $10)		90
		(To record purchase of treasury stock)
2	July 09, 2021	Cash (3m x $12)	36
		Paid-in capital-share repurchase		6
		Treasury stock (3m x $10)		30
		(To record sale of treasury stock)
3	November 14, 2023	Cash (3m x $7)	21
		Paid-in capital-share repurchase	7
		Retained earnings	2
		Treasury stock (3m x $10)		30
		(To record sale of treasury stock)

2.

Shareholders' Equity	$ in millions
	Retirement	Treasury Stock
Paid-in capital:
Common stock	287	290
Paid-in capital-excess of par	2018	2030
Retained earnings	1883	1898
Less: Treasury stock	0	30
Total shareholders' equity	4188	4188

Working:

	Retirement	Treasury Stock
Common stock	=290-9+3+3
Paid-in capital-excess of par	=2030-63+33+18
Retained earnings	=1900-17	=1900-2
Less: Treasury stock		=90-30-30