Question

At December 31, 2019, the following balance sheet of MECA International included the following shareholder’s equity accounts:

Shareholders’ Equity	($ in millions)
Preferred Stock, 9.09%, 45 million shares at $1 par	$45
Common Stock, 342 million shares at $1 par	$342
Paid-in-capital, excess of par, preferred	$958
Paid-in-capital, excess of par, Common	$854
Retained Earnings	$3,245
Treasury Stock, at cost, 2 million common shares	(20)
Total shareholders equity	$5,424

On April 13, a 4-for-2 stock split was declared and distributed. The stock split was affected in the form of a 50% stock dividend. The market value of the $1 par common stock was $13. Accordingly, the shareholders’ accounts will be:

Account	$

On January 7, 2020, MECA International, reacquired %5 of its common shares for $57,799,897. Accordingly, the shareholders’ accounts will be:

Account	$

On March 15, 2020, MECA International reacquired 17,100,000 of its common shares for $62,799,897. Accordingly, the shareholders’ accounts will be:

Account	$

On March 7, 2020, MECA International, a %4 common stock dividend was declared and distributed. The market value of the $1 par common stock was $23. Accordingly, the shareholders’ accounts will be:

Account	$

On May 1, 2020, MECA International issued 145,000 shares of $1par value common stock having a market price of $15 a share, and 25,000 shares of $10 par value preferred stock having a market price of $21 a share, for a lump sum of $1,895,000. Accordingly, the shareholders’ accounts will be:

Account	$

Answer 1

Shareholders’ Equity
($ in millions)
Preferred Stock, 9.09%, 45 million shares at $1 par	45000000
Common Stock, 342 million shares at $1 par	342000000
Paid-in-capital, excess of par, preferred	958000000
Paid-in-capital, excess of par, Common	854000000
Retained Earnings R	3245000000
Treasury Stock, at cost, 2 million common shares	-20000000
Total shareholders equity S	5424000000
I am expla ning with the help of journal entries
answers in whole dollar
a)	Dr	Cr
Retained Earning (342-2)*50%*$1   I	170000000
Common stock		170000000
Increase in common stock by	170000000
Decrease in RE by	170000000
Net effect is nil on total shareholder but the balances of
Common stock is	512000000
Retained Eraning R-I	3075000000
Total shareholders equity S	5424000000
b)
Treasury stock	57799897
Cash		57799897
Incresae in Treasury stock by	57799897
Treasury stock balance	-77799897
Total shareholders equity S	5366200103
5424000000-57799897
c)	DR	cR
Treasury stock	62799897
Cash		62799897
Incresae in Treasury stock by	62799897
Treasury stock balance	107200103
Total shareholders equity S	5303400206
5366200103-62799897
d)
Now the outsanding shares are
(340+170)=	510
less: Treasury stock 5%	-25.5
Less: Treasury stock c	-17.1
Now the outsanding shares are	467.4
4% stock dividend	18.696
	DR	Cr
Retained Eranings (18696000*23)	430008000
Common stock		18696000
Paid-in-capital, excess of par, Common		411312000
Common stock will increase by	18696000
Paid-in-capital, excess of par, Common	411312000
Retained Eraning will decresae by	-430008000
Total shareholders equity S	5303400206
e)
	DR	CR
Cash	1895000
Common stock		145000
Paid-in-capital, excess of par, Common		1381528
Preferred Stock, (25000*10)		250000
Paid-in-capital, excess of par, preferred		118472
Lumpsum value allocated	FV	ratio	lumpsum	Allocated
Common stock (145000*15	2175000	0.81	1895000	1526528
Preferred Stock, (25000*21)	525000	0.19	1895000	368472
	2700000
Below accounts will increase by
Common stock	145000
Paid-in-capital, excess of par, Common	1381528
Preferred Stock,	250000
Paid-in-capital, excess of par, preferred	118472
Total shareholders equity S	$5305295206
5303400206+1895000
If any doubt please comment