Answer:
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
