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:

ASPE

Accounting Standards for Private Enterprises; a set of accounting policies and principles developed for use by private companies in Canada.

Jointly Controlled Enterprises

A business arrangement between two or more parties who share control over the business operations and decision-making process.

Proportionate Consolidation

An accounting method where an investor entity combines its share of each of the assets, liabilities, income, and expenses of a jointly controlled entity with similar items, line by line, in its financial statements.

Cost Method

An accounting method used to value investments, where the investment is recorded at its acquisition cost without adjusting for market changes.