1 Corp X is authorized to issue 1,000,000 shares of Common Stock Par $1 No Entry

Question

1 Corp X is authorized to issue 1,000,000 shares of Common Stock Par $1 No Entry since it was just authorized but not issued.

2 Corporation X issued 500,000 shares of Common Stock Par $1 for $ 8 per share

3 Corporation X issued 1,500,000 shares of Common Stock Par $1 for $10 per share

4 Corporation X reacquired 1,000,000 shares of their Common Stock Par $1 for $ 2

5 Sold 500,000 shares of treasury stock at $8 per share

6 Paid $ 2,000,000 in cash dividends to common stockholders that was declared last month

7 Net income for the year $ 800,000

Explanation / Answer

Journal entries: S.no. Accounts title and explanations Debit $ Credit $ 1 No entry required. 2 Cash Account Dr. 4,000,000         Common Stock Account (500,000 share @1) 500,000         Paid in capital- Common Stock (500,000 shares @7) 3,500,000 3 Cash Account Dr. 15,000,000         Common Stock Account (1500,000 share @1) 1,500,000         Paid in capital- Common Stock (1500,000 shares @9) 13,500,000 4 Treasury stock Account Dr. (1000,000 share @2) 2,000,000          Cash Account 2,000,000 5 Cash Account Dr. (500,000 shares @8) 4,000,000         Treasury stock (500,000 shares @2) 1,000,000          Retained earnings 3,000,000 6 Dividend payable Dr. 2,000,000          Cash 2,000,000 7 Income Summary Dr. 800,000        Retained earnings 800,000

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