Houghton Company began business on January 1, 2015 by issuing all of its 1,750,0

Question

Houghton Company began business on January 1, 2015 by issuing all of its 1,750,000 authorized shares of its $1 par value common stock for $34 per share. On June 30, Houghton declared a cash dividend of $2.25 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 350,000 of its own shares of stock for $39 per share. On December 22, Houghton resold 175,000 of these shares for $45 per share.

Required: a. Prepare all of the necessary journal entries to record the events described above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the issue of 1,750,000 authorized shares of $1 par value for $34 per share.

2. Record the declaration of the cash dividends of $2.25 per share.

3. Record the payment of the cash dividends of $2.25 per share.

4. Record the repurchase of 350,000 shares for $39 per share.

5.

Record the issue of 1,750,000 authorized shares of $1 par value for $34 per share.

Record the declaration of the cash dividends of $2.25 per share.

Record the payment of the cash dividends of $2.25 per share.

Record the repurchase of 350,000 shares for $39 per share.

Record the reissue of 175,000 share for 45 per share.

Explanation / Answer

Part A)

The journal entries are as follows:

___________

Part B)

The stockholder's equity section is given below:

Notes:

The company will not have any opening balance of retained earnings. Therefore, the dividends paid during the year will be adjusted against current year's net income.

Date Account Titles Debit Credit January 1, 2015 Cash (1,750,000*34) $59,500,000 Common Stock (1,750,000*1) $1,750,000 Paid-in Capital Excess of Par (1,750,000*33) $57,750,000 (To record issuance of common stock) June 30, 2015 Cash Dividends (1,750,000*2.25) $3,937,500 Dividends Payable $3,937,500 (To record declaration of cash dividends) July 31, 2015 No Journal Entry (for dividend recording) August 30, 2015 Dividends Payable (1,750,000*2.25) $3,937,500 Cash $3,937,500 (To record payment of cash dividends) November 1, 2015 Treasury Stock (350,000*39) $13,650,000 Cash $13,650,000 (To record purchase of treasury stock) December 22, 2015 Cash (175,000*45) $7,875,000 Treasury Stock (175,000*39) $6,825,000 Paid-in Capital from Treasury Stock (175,000*6) $1,050,000 (To record sale of treasury stock)

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.