1) (Journal Entries!) World Marine obtained a charter from the state in January
ID: 2465448 • Letter: 1
Question
1) (Journal Entries!) World 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 $410,000 of net income and the following selected transactions occurred in the order given:
Prepare journal entries to record each transaction.
A) Record the issuance of 110,000 shares of common stock with a $5 par value for a price of $56 per share.
B) Record the purchase of 26,000 shares of previously issued common stock for a price of $51 per share.
C) Record the re-issuance of 10,500 shares of treasury stock previously purchased for a price of $51 per share and sold for $52 per share.
D) Record the re-issuance of 10,500 shares of treasury stock previously purchased for $51 per share and sold for $50 per share.
a. Issued 110,000 shares of the common stock at $56 cash per share. b. Reacquired 26,000 shares at $51 cash per share. c. Reissued 10,500 shares from treasury for $52 per share. d. Reissued 10,500 shares from treasury for $50 per share.Explanation / Answer
Journal Entries
Description
Debit
Credit
Cash 110,000*56
6,160,000
To Common stock (110,000*5)
550,000
To Paid in capital in excess of par (110,000*51)
5,610,000
Treasury stock
1,326,000
To Cash (26,000*51)
1,326,000
Cash (10,500 *52)
546,000
To Treasury stock
(10,500 *51)
535,500
To Paid in excess of par – treasury stock
10,500
Cash (10,500*50)
525,000
Paid in capital in excess of par – Treasury stock
10,500
To Treasury stock
535,500
Description
Debit
Credit
Cash 110,000*56
6,160,000
To Common stock (110,000*5)
550,000
To Paid in capital in excess of par (110,000*51)
5,610,000
Treasury stock
1,326,000
To Cash (26,000*51)
1,326,000
Cash (10,500 *52)
546,000
To Treasury stock
(10,500 *51)
535,500
To Paid in excess of par – treasury stock
10,500
Cash (10,500*50)
525,000
Paid in capital in excess of par – Treasury stock
10,500
To Treasury stock
535,500
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