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 54,000 additional shares of $1 par value common stock for $51 per share. May 10 Purchases 4,900 shares of treasury stock for $54 per share. June 1 Declares a cash dividend of $1.45 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 2,450 shares of treasury stock purchased on May 10 for $59 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

Answer:

March 1, issuance of 54,000 common stocks

Dr 2,754,000

    Cr Common stocks 54,000

    Cr Additional paid in capital in excess of par value 2,700,000

May 10, repurchase of 4,900 treasury socks at $54 each

Dr Treasury stocks 264,600

    Cr Cash 264,600

June 1, a cash dividend is declared ($1.45 per stock, 149,100 outstanding stocks)

Dr Retained earnings 216,195

    Cr Dividends payable 216,195

July 1, cash dividends are paid

Dr Dividends payable 216,195

    Cr Cash 216,195

October 21, 2,450 treasury socks are resold at $59 each

Dr Cash 144,550

    Cr Treasury stocks 132,300

    Cr Additional paid in capital in excess of par value 12,250