[The following information applies to the questions displayed below.] Global Mar

Question

[The following information applies to the questions displayed below.]

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 $310,000 of net income and the following selected transactions occurred in the order given:

a. Issued 110,000 shares of the common stock at $46 cash per share.

b. Reacquired 16,000 shares at $41 cash per share.

c. Reissued 5,500 shares from treasury for $42 per share.

d. Reissued 5,500 shares from treasury for $40 per share. 4.value: 2.00 pointsRequired information Required:

1. Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.) eBook & Resources eBook: Explain and analyze common stock transactions. 5.value: 2.00 pointsRequired information

2. 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.)

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

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) Global marine TR Assets = liabilities + Stockholders Equity a) Cash 5060000 Common stock 550000 Addittional paid in capital 4510000 b) Cash -656000 Treasury stock 656,000 c) Cash 231000 Treasury stock 225500 Addittional paid in capital 5,500 d) Cash 220000 Treasury stock 225500 Addittional paid in capita -5500 2) Journal Entries TR Account titles & Explanations Debit Credit a) Cash (110000*46) 5060000 Common stock (110000*5) 550000 Addittional paid in capital 4510000 b) Treasury stock 656000 cash (16000*41) 656,000 c) Cash (5500*42) 231000 Treasury stock (5500*41) 225500 Addittional paid in capital 5500 d) Cash 220000 Additional paid in capital 5,500 Treasury stock (5500*41) 225500 3) Stockholders Equity Contributed capital Common stock 550000 Addittional paid in capital -CS 4510000 total contributed capital 5060000 retained earnings 310,000 Total. 5370000 less treasury stock -205,000 stockholders Equity 5165000

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