Question

Problem 15-6

Sweet Company has the following stockholders’ equity accounts at December 31, 2017.

Common Stock ($100 par value, authorized 8,600 shares)		$455,900
Retained Earnings		311,600

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 0 for the amounts.)

(1)		300 shares of outstanding stock were purchased at $96 per share. (These are to be accounted for using the cost method.)
(2)		A $19 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 $103 per share.
(5)		480 shares of outstanding stock were purchased at $105 per share.
(6)		360 of the shares purchased in (5) above were resold at $95 per share. Prepare the stockholders’ equity section of Sweet Company’s balance sheet after giving effect to these transactions, assuming that the net income for 2018 was $101,600. State law requires restriction of retained earnings for the amount of treasury stock. (Enter account name only and do not provide descriptive information.)

Answer 1

SOLUTION

S.No.	Account titles and Explanation	Debit ($)	Credit ($)
1.	Treasury Stocks (300 * $96)	28,800
	Cash		28,800
2.	Retained Earnings	80,921
	Dividends Payable [(4,559-300)*$19]		80,921
3.	Dividends Payable	80,921
	Cash		80,921
4.	Cash (300 * $103)	30,900
	Treasury Stock		28,800
	Paid-in-Capital from Treasury Stock (300 * $7)		2,100
5.	Treasury Stock (480 * $105)	50,400
	Cash		50,400
6.	Cash (360 * $95)	34,200
	Paid-in Capital from Treasury Stock	2,100
	Retained Earnings	1,500
	Treasury Stock (360 * $105)		37,800