Reference no: EM133050790
Question - Reissuing treasury stockE12.5Issued 25,000 shares of common stock in exchange for $500,000 in cash. Twin Lakes incorporated on April 1, 2021, and was authorized to issue 100,000 shares of $5 par value common stock and 10,000 shares of $8, no-par preferred stock. During the remainder of 2021, the company entered into the following transactions:
1. Issued 5,000 shares of preferred stock in exchange for $60,000 in cash.
2. Purchased 3,000 common shares for $15 per share and held them in the form of treasury stock.
3. Sold 1,000 treasury shares for $18 per share on the open market.
4. Issued 1,000 treasury shares to executives who exercised stock options for a reduced price of $5 per share.
The company entered into no other transactions that affected shareholders' equity during 2021.
1. Prepare entries for each of the transactions.
2. Assume that Twin Lakes generated $500,000 in net income in 2021 and did not declare any dividends during 2021. Prepare the shareholders' equity section of the balance sheet as of December 31, 2021.
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