Account for issuance of stock, treasury stock, and other changes in stockholders' equity
Response to the following problem:
Barkley Sales, Inc., ended 2014 with 10 million shares of $1 par common stock issued and outstanding. Beginning additional paid-in capital was $9 million, and retained earnings totaled $44 million.
¦ In April 2015, Barkley Sales issued 9 million shares of common stock at a price of $2 per share.
¦ In June, the company declared and distributed a 10% stock dividend at a time when Barkley's common stock had a market value of $12 per share.
¦ Then in September, Barkley's stock price dropped to $1 per share and the company purchased 9 million shares of treasury stock.
¦ For the year, Barkley Sales earned net income of $24 million and declared cash dividends of $13 million.