Houghton Company began business on January 1, 2015 by issuing all of its 1,550,0
ID: 2598528 • Letter: H
Question
Houghton Company began business on January 1, 2015 by issuing all of its 1,550,000 authorized shares of its $1 par value common stock for $30 per share. On June 30, Houghton declared a cash dividend of $1.25 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 310,000 of its own shares of stock for $35 per share. On December 22, Houghton resold 155,000 of these shares for $41 per share.
Required:
Prepare all of the necessary journal entries to record the events described above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
1. Record the issue of 1,550,000 authorized shares of $1 par value for $30 per share.
2. Record the declaration of the cash dividends of $1.25 per share.
3. Record the payment of the cash dividends of $1.25 per share.
4. Record the repurchase of 310,000 shares for $35 per share.
5. Record the reissue of 155,000 share for 41 per share.
Prepare the stockholders' equity section of the balance sheet as of December 31, 2015 assuming that the net income for the year was $8,000,000.
Houghton Company began business on January 1, 2015 by issuing all of its 1,550,000 authorized shares of its $1 par value common stock for $30 per share. On June 30, Houghton declared a cash dividend of $1.25 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 310,000 of its own shares of stock for $35 per share. On December 22, Houghton resold 155,000 of these shares for $41 per share.
Explanation / Answer
a)1)
Cash Dr 46500000 (1550000*30)
Common Stock Cr 1550000 (1550000*1)
Paid in excess of capital Cr 44950000 (1550000*29)
a)2)
No entry for only declaration of cash dividend.
a)3)
Retained Earnings Dr 1937500 (1550000*1.25)
Cash Cr 1937500
a)4)
Treasury Stock Dr 10850000 (310000*35)
Cash Cr 10850000
a)5)
Cash Dr 6355000 (155000*41)
Treasury Stock Cr 5425000 (155000*35)
Paid in excess of capital Cr 930000 (155000*6)
b)
Issuance of common stock = 1550000
(1550000*1)
Add: Paid in excess of capital = 45880000
(44950000 + 930000)
Less: Retained earnings = 1937500
Less: Treasury Stock = 5425000
(10850000 - 5425000)
Total Stockholders' Equity = 40067500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.