Assignment 3

Intermediate Accounting 2
Andreas Bonardo (008202100036)
Accounting_Class1

P15.2 (LO 2, 4) (Treasury Share Transactions and Presentation)

Clemson SE had the following equity as of January 1, 2022.
Share capital--ordinary, €5 par value, 20,000 shares issued € 100,000
Share premium--ordinary 300,000
Retained earnings 320,000
Total equity € 720,000

During 2022, the following transactions occurred.

Feb. 1 Clemson repurchased 2,000 treasury shares at a price of €19 per share.
Mar. 1 800 shares of treasury shares repurchased above were reissued at €17 per share.
Mar. 18 500 shares of treasury shares repurchased above were reissued at €14 per share.
Apr. 22 600 shares of treasury shares repurchased above were reissued at €20 per share.
Instructions
a. Prepare the journal entries to record the treasury share transactions in 2022, assuming Clemson uses the cost method.
b. Prepare the equity section of the statement of financial position as of April 30, 2022. Net income for the first 4 months

Answer :
a.
Feb. 1 Clemson repurchased 2,000 treasury shares at a price of €19 per share.
Treasury Shares (2,000 x €19) 38,000
Cash 38,000

The equity section after repurchased

Share capital--ordinary, €5 par value, 20,000 shares issued € 100,000
Share premium--ordinary 300,000
Retained earnings 320,000
Less: Cost of treasury shares (2,000 shares) -38,000
Total equity € 682,000

Mar. 1 800 shares of treasury shares repurchased above were reissued at €17 per share.
Cash (800 x €17) 13,600
Retained Earning 1,600
Treasury Shares 15,200

Mar. 18 500 shares of treasury shares repurchased above were reissued at €14 per share.
Cash (500 x €14) 7,000
Retained Earning 2,500
Treasury Shares 9,500

Apr. 22 600 shares of treasury shares repurchased above were reissued at €20 per share.
Cash (600 x €20) 12,000
Treasury Shares 11,400
Share Premium-Treasury 600
b.
The equity section of the statement of financial position as of April 30, 2022.
Net income for the first 4 months of 2022 was €130,000.

Clemson SE Company *
Statement of Owner's Equity
30-Apr-14

Share capital--ordinary, €5 par value, 20,000 shares issued

issued and 19,900 outstanding € 100,000
Share premium--ordinary € 300,000 **
Share Premium-Treasury € 600 € 300,600
Retained Earnings* € 445,900
€ 846,500
Less : Treasury shares (100 shares)** € 1,900
Total Equity € 844,600
emson uses the cost method.
income for the first 4 months of 2022 was €130,000.
Retained Earnings (Beginning Balance) € 320,000
March 1 reissued € (1,600)
March 8 reissued € (2,500)
Net Income € 130,000
Retained Earnings (Ending Balance) € 445,900

Treasury shares (Beginning Balance) € -

February 1 purchase (2,000 shares) € 38,000
March 1 sale (800 shares) € (15,200)
March 18 sale (500 shares) € (9,500)
April 22 sale (600 shares) € (11,400)
Treasury shares (ending balance) € 1,900