No. Account Titles and Explanation Debit Credit 1. 2. 3. Question 1 Samson Compa

Question

No. Account Titles and Explanation Debit Credit 1. 2. 3. Question 1 Samson Company had the following transactions.

1. Issued 5,000 shares of $100 par preferred stock at $107 for cash. 2. Issued 8,000 share of common stock with a par value of $10 for $120,000. 3. Purchased 500 shares of treasury common stock for $12,000.
Prepare the journal entries to record the above stock transactions. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No. Account Titles and Explanation Debit Credit 1. 2. 3.


Samson Company had the following transactions.

Explanation / Answer

1] DEBIT CASH (5000*107) 535000

CREDIT PREFERRED STOCK(5000*100) 500000

CREDIT SECURITIES PREMIUM[5000*(107-100)] 35000

2] a]IF ISSUED FOR CASH THEN:

DEBIT CASH[8000*15] 120000

CREDIT COMMON STOCK(8000*10) 80000

CREDIT SECURITIES PREMIUM [8000*(15-10)] 40000

  

b]IF CASH IS DUE THEN:

DEBIT COMMON STOCK HOLDERS[8000*15] 120000

CREDIT COMMON STOCK(8000*10) 80000

CREDIT SECURITIES PREMIUM [8000*(15-10)] 40000

3] DEBIT TREASURY COMMON STOCK 12000

CREDIT COMMON STOCK 12000

FOR SELF UNDERSTANDING NOT RELATED TO QUESTION

The portion of shares that a company keeps in their own treasury. Treasury stock may have come from a repurchase or buyback from shareholders; or it may have never been issued to the public in the first place. These shares don't pay dividends, have no voting rights, and should not be included in shares outstanding calculations.

Treasury stock is often created when shares of a company are initially issued. In this case, not all shares are issued to the public, as some are kept in the companies treasury to be used to create extra cash should it be needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers.

Alternatively, treasury stock can be created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.

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