Power Drive Corporation designs and produces a line of golf equipment and golf a

Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.

March 1 Issues 59,000 additional shares of $1 par value common stock for $56 per share.

May 10 Purchases 5,400 shares of treasury stock for $59 per share.

June 1 Declares a cash dividend of $1.70 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,700 shares of treasury stock purchased on May 10 for $64 per share.

Required:

Record each of these transactions.

Explanation / Answer

Record each of these transactions.

Date accounts & explanation debit credit Mar 1 Cash 3304000 Common stock 59000 Paid in capital in excess of par value-common stock 3245000 (To record issue common stock) mar 10 Treasury stock (5400*59) 318600 Cash 318600 (To record treasury stock purchased) June 1 Cash dividend (159000-5400*1.70) 261120 Cash dividend payable 261120 (To record dividend declared) June 15 No entry July 1 Cash dividend payable 261120 Cash 261120 (To record dividend paid) Oct 21 Cash (2700*64) 172800 Treasury stock (2700*59) 159300 Paid in capital from sale of treasury stock 13500 (To record sale of treasury stock)

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