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Question text Accounting for Shareholders' Equity Transactions The shareholders' equity section of the balance sheet of The Claremont Company...

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Accounting forShareholders' Equity Transactions
The shareholders' equity section of the balance sheet of TheClaremont Company appeared as follows at the end of the first yearof operations:

Common stock,$0.08 par value$480,000
Additionalpaid-in-capital71,520,000
Retainedearnings25,600,000
Treasurystock(6,000,000)
Shareholders'equity$91,600,000

During the second yearof operations, the following transactions occurred:

  1. Generated net income of $4.8 million.
  2. Paid a cash dividend of $1.2 million.
  3. Purchased 100,000 shares of common stock at $7.6 pershare.
  4. Executed a 1-for-2 reverse stock split.

Prepare theshareholders' equity section of the balance sheet of ClaremontCompany at the end of the second year of operations.

Use a negative signwith treasury stock answer.

The ClaremontCompany
Stockholders' Equity
December 31, Year 2
Common stock,par value$Answer
Additionalpaid-in-capitalAnswer
RetainedearningsAnswer
TreasurystockAnswer
Totalshareholders' equity$Answer

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The Claremont Company
Stockholders' Equity
December 31, Year 2
Common stock, par value $        480,000
Additional paid-in-capital $ 71,520,000
Retained earnings Working-1 $ 29,200,000
Treasury stock $   -6,760,000
Total shareholders' equity $ 94,440,000
Working-1
Beginning Retained earning $ 25,600,000
Add: Net Income $     4,800,000
Less: Cash Dividend $   -1,200,000
Ending Retained earning $ 29,200,000
Working-2
Treasury Stock, Beginning $   -6,000,000
Add: New 100,000*$7.6 $      -760,000
$   -6,760,000

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