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GenaCL600 [577]
3 years ago
14

Treasury Stock Pomona Corporation issued 60,000 shares of $3 par value common stock at $21 per share and 9,000 shares of $30 par

value, ten percent preferred stock at $85 per share. Later, the company purchased 2,000 shares of its own common stock at $23 per share. a. Prepare the journal entries to record the share issuances and the purchase of the common shares.
Business
1 answer:
In-s [12.5K]3 years ago
5 0

Answer:

Issuance

Common Stock

Dr. Cash                                          $1,260,000

Cr. Common Stock                                                 $180,000

Cr. Paid-in-Capital excess of par common stock $1,080,000

Preferred Stock

Dr. Cash                                          $765,000

Cr. Preferred Stock                                                 $270,000

Cr. Paid-in-Capital excess of par Preferred stock $495,000

Treasury Stock Purchase

Dr. Treasury Stock    $46,000

Cr. Cash                     $46,000

Explanation:

Common Shares are issued at a specified price, we need to record the par value of the share in common stock account and The value excess of par in the Paid-in-Capital Excess of par common stock separately.

Issuance of 60,000 shares

Par value = $60,000 x 3 = $180,000

Excess of par value = ($21 - $3 ) x 60,000 = $1,080,000

Preferred stock has also recorded same as the common but in different accounts

Par Value = 9,000 x $30 = $270,000

Excess of par value = ($85 - $30) x 9,000 = $495,000

Treasury stocks are the company's own shares which is repurchased by the company. It is recorded in treasury shares account which is an contra equity account. I can be reissued or cancelled by the company.

Purchase of Treasury Stock

Treasury Stock = 2,000 x $23 = $46,000

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Answer:

Decrease is taxes

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Explanation:

Government policies that increases the money supply in an economy is known as expansionary fiscal policy. They are:

1. Decrease is taxes - when government reduces the tax rate, the amount paid as taxes falls and as a result individuals, companies have higher disposable income whuch can be used for consumption or saving. This increases the money supply in the economy.

2. Increase in government spending - if the government increases it's spending on public goods for example, money supply would increase. If the government constructs a road, labour would be employed and paid wages. This payment increases the income of Labour and money supply increases.

Central bank policies that increases money supply are known as expansionary monetary policies. They include:

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Option B

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