Global Marine obtained a charter from the state in January that authorized 1,000

Question

Global 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 $440,000 of net income and the following selected transactions occurred in the order given:

a. Issued 110,000 shares of the common stock at $59 cash per share.

b. Reacquired 29,000 shares at $54 cash per share.

c. Reissued 12,000 shares from treasury for $55 per share.

d. Reissued 12,000 shares from treasury for $53 per share.

Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1).Record the issuance of 110,000 shares of common stock with a $5 par value for a price of $59 per share.

2). Record the purchase of 29,000 shares of previously issued common stock for a price of $54 per share.

3) Record the re-issuance of 12,000 shares of treasury stock previously purchased for a price of $54 per share and sold for $55 per share.

4) Record the re-issuance of 12,000 shares of treasury stock previously purchased for $54 per share and sold for $53 per share.

Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

1.

Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1).Record the issuance of 110,000 shares of common stock with a $5 par value for a price of $59 per share.

2). Record the purchase of 29,000 shares of previously issued common stock for a price of $54 per share.

3) Record the re-issuance of 12,000 shares of treasury stock previously purchased for a price of $54 per share and sold for $55 per share.

4) Record the re-issuance of 12,000 shares of treasury stock previously purchased for $54 per share and sold for $53 per share.

2.

Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

Explanation / Answer

1)

Requirement 2)

S.NO. Account Debit Credit 1 Cash (110000*59) $6,490,000 common Stock (110000*5) $550,000 Additional Paid in Capital $5,940,000 2 Treasury Stock (29000*54) $1,566,000 Cash $1,566,000 3 Cash (12000*55) $660,000 Treasury Stock (12000*54) $648,000 Additional Paid in Capital $12,000 4 Cash (12000*53) $636,000 Paid in capital from Treasury Stock (Loss) ($12,000) Treasury Stock (12000*54) $648,000

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