Question

March 1 Issues 49,000 additional shares of $1 par value common stock for $46 per share. May 10 Purchases 4,400 shares of treasury stock for $49 per share. June 1 Declares a cash dividend of $1.20 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 2,200 shares of treasury stock purchased on May 10 for $54 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 49,000 additional shares of $1 par value common stock for $46 per share.

Dr Cash 2,254,000

Cr Common stock 49,000

Cr Additional paid in capital 2,205,000

May 10 Purchases 4,400 shares of treasury stock for $49 per share.

Dr Treasury stock 215,600

Cr Cash 215,600

Treasury stocks are recorded at purchase price against cash. It is a contra equity account that reduces stockholders' equity.

June 1 Declares a cash dividend of $1.20 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

Dr Retained earnings 53,520

Cr Dividends payable 53,520

Outstanding stocks = 49,000 - 4,400 = 44,600 stocks

July 1 Pays the cash dividend declared on June 1.

Dr Dividends payable 53,520

Cr Cash 53,520

October 21 Resells 2,200 shares of treasury stock purchased on May 10 for $54 per share.

Dr Cash 118,800

Cr Treasury stock 107,800

Cr Additional paid in capital 11,000