Required: Identify the type of accounting change this decision represents and prepare the journal entry to effect the reclassification of treasury shares as retired shares.
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In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2018 to discontinue accounting for reacquired shares as
| ($ in millions) | |||||
| Common stock, $1 par | $ | 300 | |||
| Paid-in capital—excess of par | 1,200 | ||||
| Retained earnings | 1,156 | ||||
| Treasury stock (6.0 million shares at cost) | (125 | ) | |||
| Total shareholders’ equity | $ | 2,531 | |||
Required:
Identify the type of accounting change this decision represents and prepare the
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- In keeping with a modernization of corporate statutes in its home state, UMC Corporation decided in 2024 to discontinue accounting for reacquired shares as treasury stock. Instead, shares repurchased will be viewed as having been retired, reassuming the status of unissued shares. As part of the change, treasury shares held were reclassified as retired stock. At December 31, 2023, UMC's balance sheet reported the following shareholders' equity: Common stock, $1 par Paid-in capital-excess of par Retained earnings Treasury stock (5.3 million shares at cost) Total shareholders' equity Required: Identify the type of accounting change this decision represents and prepare the journal entry to effect the reclassification of treasury shares as retired shares. Complete this question by entering your answers in the tabs below. Type of accounting change General Journal ($ in millions) $ 265 1,060 1,086 (90) $ 2,321 Prepare the journal entry to effect the reclassification of treasury shares as…On January 1, 2019, Mulcahy Manufacturing Inc., a newly formed corporation, issued 1,000shares of common stock in exchange for $150,000 cash. No other shares were issued during2019, and no shares were repurchased by the corporation. On November 1, 2019, the corporation’smajor stockholder sold 300 shares to another stockholder for $50,000. The corporationreported net income of $37,500 for 2019.Required:Prepare the stockholders’ equity section of Mulcahy’s balance sheet at December 31, 2019.Oakwood Inc. is a public enterprise whose shares are traded in the over-the-counter market. At December 31, 2018, Oakwood had 6,000,000 authorized shares of $10 par value common stock, of which 2,000,000 shares were issued and outstanding. The shareholders’ equity accounts at December 31, 2018, had the following balances: Transactions during 2019 and other information relating to the shareholders’ equity accounts were as follows: 1. On January 5, 2019, Oakwood issued at $54 per share, 100,000 shares of $50 par value, 9%, cumulative convertible preferred Stock. Each share of preferred stock is convertible, at the option of the holder, into 2 shares of common stock. Oakwood had 600,000 authorized shares of preferred stock. 2. On February 2, 2019, Oakwood reacquired 20,000 shares of its common stock for $16 per share. Oakwood uses the cost method to account for treasury stock. 3. On April 27, 2019, Oakwood sold 500,000 shares (previously unissued) of $10 par value common stock to the…
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- Dakota Corporation had the following shareholders' equity account balances at December 31, 2018: Transactions during 2019 and other information relating to the shareholders' cquity accounts were as follows:1. Dakota's preferred and common shares are traded on the over-the-counter market. At December 31, 2018,Dakota had 100,000 authorized shares of $100 par, 10%, cumulative preferred stock; and 3,000,000 autho-rized shares of no-par common stock with a stated value of $5 per share.2. On January 9, 2019, Dakota formally retired all 30,000 shares of its treasury common stock and had them revert to an unissued basis. The treasury stock had been acquired on January 20, 2018. The shares were originally issued at $10 per share,3. Dakota owned 10,000 shares of Bush Inc, common stock purchased in 2016 for $750,000. The Bush stock was included in Dakota's short-term marketable securities portfolio at the end of 2018 at a value of $650,000.On February 13, 2019, Dakota declared a dividend in kind…In January 2020, Bramble Corp., a newly formed company, issued 11700 shares of its $12 par common stock for $17 per share. On July 1, 2020, Bramble Corp. reacquired 1170 shares of its outstanding stock for $14 per share. The acquisition of these treasury shares decreased total stockholders' equity. did not change total stockholders' equity. increased total stockholders' equity. decreased the number of issued shares.At the beginning of 2021, Pioneer Products’ ownership interest in the common stock of LLB Co. increased to the point that it became appropriate to begin using the equity method of accounting for the investment. The balance in the investment account was $44 million at the time of the change but would have been $56 million if Pioneer had used the equity method since first investing in LLB. How should Pioneer report the change? Would your answer be the same if Pioneer is changing from the equity method rather than to the equity method?
- The corporation was established in 2019. The Corporation issued 100,000, 20 par value shares ofstocks at an issue price of 25. On May 1, 2020, the corporation issued 20,000 new shares at an issue price of 30 per share. The corporation reported a net income of 356,785 and 425,000 in 2019 and 2020, respectively. Dividends of ₱2 per share were declared and distributed to shareholders on March 31,2020. There were no dividends distributed on the first year of operation of the corporation. Make a Statement of Changes in Equity for the year 2020.On January 1, 2024, Sandhill Ltd. had the following shareholders' equity accounts: Common shares (1,010,000 issued) Retained earnings The company was also authorized to issue an unlimited number of $4 noncumulative preferred shares. As at January 1, 2024, none had been issued. During 2024, the corporation had the following transactions and events related to its shareholders' equity: Jan. 2 Issued 101,000 preferred shares for $50 per share. Paid quarterly dividend to preferred shareholders. Paid quarterly dividend to preferred shareholders. Issued 110,000 common shares for $1.70 per share. Paid quarterly dividend to preferred shareholders. Paid quarterly dividend to preferred shareholders and a $0.25 per share dividend to the common shareholders. 31 Loss for the year was $99,000. Mar. June 30 Aug. 12 Sept. 30 Dec. 31 Dec. (a) $1,515,000 1,818,000 31 Journalize the transactions and the entries to close dividends and the Income Summary account. (Credit account titles are automatically…Da-Rocha Ltd is a listed manufacturing company which prepares its financial statements for the year ended 31 October, 2018 in accordance with IFRS. The financial statements are due to be authorized for issue on 15 January 2019. i.Da-Rocha Ltd holds an investment in the shares of a listed company, Shelga Ltd. During November 2018 there was a material fall in the value of Shelga Ltd’s shares. Analysts attribute the fall in value principally to a fraud dating back to December 2017 that was discovered by Shelga Ltd's management and announced publicly in November 2018. ii.In December 2018, the directors of Da-Rocha Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions. Required: Discuss the effects of each of the above items on the financial statements of Da-Rocha Ltd for the year ended 31 October 2018 in accordance with IAS 10 Events after the Reporting Period