In 2016, Borland Semiconductors entered into the transactions described below. I
ID: 2477820 • Letter: I
Question
In 2016, Borland Semiconductors entered into the transactions described below. In 2013, Borland had issued 160 million shares of its $1 par common stock at $25 per share. Required: Assuming that Borland retires shares it reacquires, record the appropriate journal entry for each of the following transactions: 1. On January 2, 2016, Borland reacquired 11 million shares at $23.00 per share. 2. On March 3, 2016, Borland reacquired 11 million shares at $28 per share. 3. On August 13, 2016, Borland sold 1 million shares at $33 per share. 4. On December 15, 2016, Borland sold 2 million shares at $28 per share.
Explanation / Answer
When shares are re acquired equity is reduced.
Equity share capital dr 11mn× 25 = 275
To Cash Account 11× 23 = 253
To Reserves (275- 253) 22
on 3rd March
Equity share capital Account 11 × 25 = 275
Excess of cash paid over par value 11× 3 = 33
To Cash 308
On Aug 3 entry is
Bank /cash ac 33×1 33
To Equity share capital 25× 1 25
To premium on issue of share 8
On dec 15
Cash ac 2×28 56
To Equity share capital 50
To premium on issue of share 6
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