Question

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $350,000 of net income, declared no dividends, and the following selected transactions occurred in the order given: Issued 100,000 shares of the common stock at $50 cash per share. Reacquired 20,000 shares at $45 cash per share. Reissued 7,500 shares from treasury for $46 per share. Reissued 7,500 shares from treasury for $44 per share. 2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer:

The journal entries are made as  follows;

Explanation:

1.Cash  100,000*50                 Dr.$5,000,000

Common Stocks    100,000*5 Cr.$500,000

Paid in capital-common stocks  Cr.$4,500,000

2.Treasury Stocks          20,000*45  Dr.$100,000

   Cash 20,000*45                          Cr.$100,000

3. Cash 7,500*46                      Dr.$345,000

    Treasury Stocks 7,500*45        Cr.$337,500

    Paid in Capital-Treasury stocks  7,500*(46-45)   Cr.$7,500

4.Cash 7,500*44                                      Dr.$330,000

Paid in capital-Treasury Stock 7,500*1       Dr.$7,500  

Treasury stocks 7,500*45                       Cr.$337,500

   

 

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