PART B (JOURNAL ENTRIES): In year 2012, for Wizard Company, the following transa

Question

PART B (JOURNAL ENTRIES): In year 2012, for Wizard Company, the following transactions affecting stockholders' equity occurred: Page 1 of 3 a. On March 1, purchased in the market 400 shares of the company's own common stock at S40 per share. b. On May 24, sold 80 shares of treasury stock for S50 cash per share. c. On July 28, sold 60 shares of treasury stock for $30 cash per share d. On August 10, declared 5% stock dividends for 1000 shares outstanding with the par value of $1 per share. The market price was $40 per share on that date. e. On September 8, split its stock "10-for-1." 1. Prepare journal entries for each of these transactions. 110 POINTS. 2 Describe the impact, if any, that these transactions have on the income statement. IS POINTS)

Explanation / Answer

Journal Entries Sr. No. Sr. No. Account Title and explanation Debit Credit a) Mar, 01 Treasurry stock (400 shares X $40) $16,000            To Cash $16,000 (To Record the purchase of treasurry Stock) Cash (80 Shares X $ 50) $4,000 b) May, 24        To Treasurry Stock (80 Shares X $ 40) $3,200        To Addittional Pais in Capital - Treasurry Stock $800 (To Record the sale of treasurry Stock) Cash (60 Shares X $ 30) $1,800 c) July , 28 Addittional Pais in Capital - Treasurry Stock $600        To Treasurry Stock (60 Shares X $ 40) $2,400 (To Record the sale of treasurry Stock) Retained Earning (1000 Shares X 5% X $ 40) $2,000 d) Aug, 10              To Stock Dividend Payable $2,000 (To Record the dividend declaration) Stock Dividend Payable $2,000.00 d)       To Sahre Capital - Common Stock(50 shares X $ 1) $50.00       To addittional paid in capital $1,950.00 (To Record the issue of shares Capital) Share Capital - Common Stock (1,050 Shares X $ 1) $10,500.00       To Share Capital - Common Stock (10,500 Shares X $ 0.10) $10,500.00 E) Total shares outstanding = 1000 Shares + 50 Shares = 1050 Shares *10 = 10500 new shares

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