Answer and Explanation:
The Journal entry with their narrations is shown below:-
1. Cash account Dr, $40,000,000
($40 × $1,000,000
)
To Common stock $1,000,000
To Paid-in-capital in excess of par $39,000,000
(Being issue of common shares is recorded)
2. Retained earnings Dr, $2,000,000
To Dividend payable $2,000,000
(1,000,000 × $2)
(Being the declaration of the cash dividend on June 30 is recorded)
3. Dividend payable Dr, $2,000,000
To Cash account $2,000,000
(Being the payment of cash dividend on July 30 is recorded)
4. Treasury stock Dr, $10,000,000
(200,000 × $50)
To Cash account $10,000,000
(Being the reacquire of its own share on November 1, is recorded)
5. Cash account Dr, $6,000,000
(100,000 × $60)
To Treasury stock $5,000,000
To Paid-in-capital-treasury stock $100,000
(Being the resale of treasury shares on December 22 is recorded)
