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Mountip Inc. was incorporated under provincial legislation with a December 31 year-end. Th

Mountip Inc. was incorporated under provincial legislation with a December 31 year-end. The company has a single class of shares. As at December 31, 2011, it had 150,000 shares issued and outstanding. These shares had a book value of $5,700,000 on the balance sheet. During 2012, Mountip repurchased 5% of the issued shares from one of the minority shareholders at a cost of $48 per share. The company held these in treasury and later found a buyer for half of these shares at $52. The other half were sold at $46 to another investor.

 

Requirement:

Record the share transactions using the alternative two-transaction method for treasury stock.

 

7) Dunst Company had the following shareholders' equity account balances on December 31, 2011:

 

Common stock, 150,000 authorized, 40,000 issued              $880,000

Contributed surplus on repurchases and resales45,000

Treasury shares, 20,000 shares(800,000)

Retained earnings500,000

Total shareholder's equity$625,000

 

During 2012, the following transactions occurred:

i. May 1: Dunst resold 1,600 of the treasury shares at $52 per share.

ii. Dec. 30: The board of directors declared cash dividends of $2 per share.

iii. Dec. 31: Net income for the year ended December 31, 2012 was $150,000.

 

Dunst uses the single transaction method for treasury shares.

 

Requirements:

a. Record the journal entries for the transactions in 2012 and make all the necessary year-end entries relating to shareholders' equity accounts.

b. Prepare the presentation of the shareholders' equity section of Dunst's balance sheet as at December 31, 2012.

Dec 11 2019 Read more Less More

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