Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March 1 Issues 45,000 additional shares of $1 par value common stock for $42 per share.
May 10 Purchases 4,000 shares of treasury stock for $45 per share.
June 1 Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July 1 Pays the cash dividend declared on June 1.
October 21 Resells 2,000 shares of treasury stock purchased on May 10 for $50 per share.
Required: Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

March 1 Issues 45,000 additional shares of $1 par value common stock for $42 per share.

• Dr Cash 1,890,000
• Cr Common stock 45,000
• Cr Additional paid in capital 1,845,000

May 10 Purchases 4,000 shares of treasury stock for $45 per share.

• Dr Treasury stock 180,000
• Cr Cash 180,000

June 1 Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

• Dr Retained earnings 141,000
• Cr Dividends payable 141,000

July 1 Pays the cash dividend declared on June 1.

• Dr Dividends payable 141,000
• Cr Cash 141,000

October 21 Resells 2,000 shares of treasury stock purchased on May 10 for $50 per share.

• Dr Cash 100,000
• Cr Treasury stock 90,000
• Cr Additional paid in capital 10,000