Problem 3- Shareholders Equity Presented below is information related to NewCo C

Question

Problem 3- Shareholders Equity Presented below is information related to NewCo Corp shareholder transactions during 2018: 1. O n January 1, the company was formed, and was authorized to issue 175,000 shares of $1 par value common stock. On January 2, 84,000 shares were issued for $16 per share On March 31, NewCo issued a 1:3 reverse stock split On April 15, NewCo issued and distributed a 4% stock dividend, when the shares were valued at $16 per share On June 30, NewCo declared a cash dividend of $0.50, payable to the shareholders of record on July 15, to be paid on July 25. On August 2, the company purchases 855 shares of the common stock outstanding at $46 per share and retires the shares. 2. 3. 4, . 5. 6. ethe general ou e Instructions transaction by the date, and if no entry is required, write "No Entry." (b) How many shares were outstanding as of December 31, 2018.

Explanation / Answer

01/01/2018 No Entry working 02/01/2018 Bank A/c dr 1344000 (84000*16) to Share Capital ($1) 84000 (84000*1) to Additional Paid-in-capital 1260000 (84000*15) 31/03/2018 Share Capital ($1) 84000 (84000*1) to Share Capital ($3) 84000 (28000*3) 15/04/2018 Dividend 3360 (84000*1*4%) to Bank 3360 (84000*1*4%) 30/04/2018 Dividend 14000 (28000*0.5) to Dividend Payable 14000 (28000*0.5) 25/07/2018 Dividend Payable 14000 to Bank 14000 02/08/2018 Share Capital ($3) 2565 (855*3) Additional Paid-in-capital 38475 (855*45) to Bank 39330 (855*46) to profit on purchase of own stock 1710 (855*2) No. of Shares outstanding Shares issued as on 2nd january 84000 Reverse stock split -84000 New shares issued due to Reverse stock split 28000 Purchase shares on 02nd August -855 Closing Balance 27145

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