Project $2\mathrm{.}4$ Topic: Equity Transactions and Equity$-$based

Compensation

On $\frac{1}{1}\frac{?}{20}1,$ Illini has $20,000$ shares of $$1$ par common stock outstanding.

On $1/1/20$X$1,$ Illini Company's executives have $1,000$ vested stock options that were awarded

as compensation before. These options permit them to buy $1,000$ shares of the Illini's $$1$ par

value common stock at an exercise price of $$10.$ The fair value of these options on the original

option grant date was estimated at $$4$ each.

During $20$X$1$ Illini Company reacquires $1,500$ common shares as treasury shares as follows:

$\frac{4}{1}\frac{?}{20}1,300$ shares $at$ $$10$ each

$\frac{7}{1}\frac{?}{20}1,400$ shares $at$ $$15$ each

$\frac{10}{1}\frac{?}{20}1,800$ shares $at$ $$20$ each

On April $1,20$X$1,$ Illini issued $1,000$ shares of $$100$ par value $8\%$ convertible cumulative

preferred stock. The shares are sold at par value. These shares are convertible into $2,000$

common shares.

No dividends are declared in $20$X$1.$

On January $1,20$X$2,$ the stock price is $$18$ per share, and $500$ options are exercised. Assume

that Illini reissues treasury shares to satisfy the executives' exercise of options, and that it is

using the first$-$in first$-$out cost flow method. The average stock price in $20$X$1$ and $20$X$2$ are the

same at $$16$ per share. Assume that there is a zero balance in the APIC$-$ treasury stock

account on $\frac{1}{1}\frac{?}{20}1.$

During $20$X$2,$ Illini Company also has the following transactions:

Feb $1$: Issues $1,000$ shares of common stock for $$15$ per share.

April $1$: Issues $1,000$ shares of common stock in exchange for the right to use a

competitor's brand when marketing its products. The stock trades at $$16$ per share on April

$1,202,$ and independent experts put the value of the brand between $$10,000$ and

$$20,000.$ Please use "brand asset" to record the right.

September $1$: Re$-$issues the remaining $1,000$ shares of treasury stock at $$16$ per share,

originally acquired in $201.$

October $1$: Has a $2-$for$-1$ stock split effected in a $100\%$ stock dividend on all outstanding

common shares on this date. Hint: record the transaction at the par value of the stock.

Assume that the conversion ratios for outstanding convertible bonds and

convertible preferred stock would double after the $2-$for$-1$ stock split.

December $31$: Declares and pays cash dividends to both preferred and common

stockholders. The dividends to common stockholders are $10$ cents per share. Project $2\mathrm{.}4$ Ledger

$\backslash$table$[[$Date$,$Account Name,Debit,Credit,$],[,$Treasury stock,$3,000[$A$],,],[,,$Cash,,$3,000[$B$],],[,,,,,],[,$Treasury stock,$6,000[$C$],,],[,,$Cash,,$6,000[$D$],],[,,,,,],[10/1/20$X$1,$Treasury stock,$16,000[,,],[,,$Cash,,$16,000[$F$],],[,,,,,],[4/1/20$X$1,$Cash,,$100,000[$G$],,],[,$Preferred stock,,$100,000[$H$],],[,,,,],[,,,,,],[,$Cash,,$5,000[1],,],[,$APIC $-$ stock options,$2,000[$J$],,],[,,$Treasury stock,,$6,000[$K$],],[,,$APIC$-$treasury stock,$1,000[$L$],],[,,,,,],[,$Cash,,$15,000[$M$],,],[,,$Common stock,,$1,000[$N$],],[,,$APIC,,$14,000[0],],[,,,,,],[,$Brand asset,$16,000[$P$],,],[,,$Common stock,,$1,000[0],],[,,$APAC,,$15,000[$R$],],[,,,,,],[,$Cash,,$16,000[$S$],,],[,$APIC$-$treasury stock,$1,000[$T$],,],[,$Retained earnings,$[$U$],,],[,,$Treasury stock,,$($V$),],[,,,,,],[10/1/20\backslash$times $2,$Retained earnings,$[$W$],,],[,$Common stock,,$[$X$],],[,,,,],[,,,,],[,$Retained earnings,$[$Y$],,],[,,$Cash,,$[$Z$],]]$

I need help figuring out U through Z$.$