Dunst Company Had the Following Shareholders' Equity Account Balances on December

question 52

Essay

Dunst Company had the following shareholders' equity account balances on December 31, 2020: $\begin{array}{lr}\text { Common stock, } 150,000 \text { authorized, } 40,000 \text { issued } & \$ 880,000 \\\text { Contributed surplus on repurchases and resales } & 45,000 \\\text { Treasury shares, } 20,000 \text { shares } & (800,000) \\\text { Retained earnings } & 500,000 \\\text { Total shareholder's equity } & \$ 625,000\end{array}$ During 2021, 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, 2021 was $150,000.
Dunst uses the single transaction method for treasury shares.
Required:
a. Record the journal entries for the transactions in 2021 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, 2021.

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Definitions:

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