4.) During the first year of operations, New York Corporation had the following
ID: 2527428 • Letter: 4
Question
4.) During the first year of operations, New York Corporation had the following transactions:
Jan. 1 — Issued 50,000 shares of $1 par value common stock at $20 per share.
May 24 — Reacquired 5,000 shares of common stock sold on Jan. 1 for $23 per share.
Aug. 31 — Sold 500 shares of its treasury stock purchased on May 24 for $25 per share.
Oct. 18 — The board of directors declared and distributed a 10% common stock. The market price of the common stock was $26 per share at the time of the declaration.
Nov. 24 — The board of directors declared a cash dividend of $0.50 per share payable to stockholders on December 8.
Dec. 8 — Paid the cash dividends declared on November 24.
Required:
Prepare the journal entries for the above transactions. Omit explanations.
Explanation / Answer
Jan 1 Bank a/c dr $1,000,000
Common Stock a/c $50,000
Premium a/c $950,000
May 24 Treasury stock a/c dr $115,000
Bank a/c $115,000
Aug 31 Bank a/c dr $12,500
Treasury stock a/c $11,500
Profit a/c $1,000
Oct 18 Bank a/c dr $130,000
Common stock a/c $5,000
Premium a/c $125,000
Nov 24 Dividend Payable a/c dr $27,500
Stockholders a/c $25,250
Dividend on treasury stock a/c $2,250
Dec 8 Stockholders a/c dr $25,250
Bank a/c $25,250
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