The stockholders equity section of Nielsen Corporations December 31, 2011, balance sheet is as follows: Stockholders Equity

Question:

The stockholders’ equity section of Nielsen Corporation’s December 31, 2011, balance sheet is as follows:

Stockholders’ Equity

Contributed capital:

Preferred stock (10%, $50 par, 10,000 shares authorized,

1,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000

Common stock ($15 par, 100,000 shares authorized,

5,000 shares issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000

Paid-in capital in excess of par, preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000

Paid-in capital in excess of par, common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $152,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $254,000

During 2012, Nielsen Corporation had the following transactions affecting stockholders’ equity:

Jan. 20 Paid a cash dividend of $2 per share on common stock. The dividend was declared on December 15, 2011.

Aug. 15 Reacquired 1,000 shares of common stock at $20 per share.

Sept. 30 Reissued 500 shares of treasury stock at $21 per share.

Oct. 15 Declared and paid cash dividends of $3 per share on the common stock.

Nov. 1 Reissued 200 shares of treasury stock at $18 per share.

Dec. 15 Declared and paid the 10% preferred cash dividend.

31 Closed net income of $40,000 to Retained Earnings. (Revenues were $260,000; expenses were $220,000.) Also closed the dividends accounts to Retained Earnings.

Required:

1. Journalize the transactions.

2. Prepare the stockholders’ equity section of Nielsen December 31, 2012, balance sheet.

3. Interpretive Question: What is the effect on earnings per share when a company purchases treasury stock?

Common Stock
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