Common Stock Transaction and Stockholders Equity
P1. On March 1, 2011 Dora Corporation began operations with a charter from the state that authorized 50,000 shares of $4 par value common stock. Over the next quarter, the firm engaged in the transactions that follow.
Mar. 1 issued 15,000 shares of common stock, $100,000.
Mar. 2 paid fees associated with obtaining the charter and starting up and organizing the corporation, $12,000.
Apr. 10 issued 6,500 shares of common stock, $65,000.
Apr. 15 purchased 2,500 shares of common stock, $25,000
May 31 the board of directors declared a $0.20 per share cash dividend to be paid on June 15 to shareholders of record on June 10.
1. Record the above transactions in the general journal.
2. Prepare the stockholders equity section of Dora Corporations balance sheet on May 31, 2011. Net income earned during the first quarter was $15,000.
3. What effect, if any, will the cash dividend declaration on May 31 have on Dora Corporation net income, retained earnings, and cash flows?
There are two methods for recording treasury stock the cost method and the par value method. You didn’t stipulate which one you wanted so I used the cost method
1. Record the above transactions in general journal.
Date Dr Cr
Mar 1 Cash
Paid in capital in excess of par $100,000
Mar 2 Organization Cost
Apr 10 Cash
Paid in capital in excess of par 65,000
Apr 15 Treasury Stock
May 31 Cash Dividend
Recording common stock transactions in the general journal, preparing the stockholders equity section of the balance sheet. Explanation of the effect of dividends declared on the net income, retained earnings, and cash flow of the company.
Sixnut Inc: Prepare journal entries for stock transactions
Sixnut, Incorporated has been authorized to issue 1,000,000 shares of $1 par common stock, and
100,000 shares of 8%, $100 par, cumulative, preferred stock. During the first six months of
operation, the following transactions occurred related to the stock.
Jul 1st Sold 200,000 shares of common stock for $15 per share, and 100,000
shares of preferred stock, sold at par.
Jul 1st Issued 100,000 shares of common stock in exchange for the following
assets: Land $250,000
The market value of the stock was $15 per share.
Sep 1st Sold 100,000 shares of common stock for $20 per share.
Oct 31st Repurchased 50,000 shares of common stock for $25 per share. Sixnut
has elected to use the cost method to account for the treasury stock.
Nov 30th Re-sold 20,000 shares of the treasury stock for $35 per share.
Dec 31st Recorded net income for the first six months in the amount of $5,000,000.
(Hint: Debit: Income Summary)
Required: Prepare, in proper form, the journal entries required to account for the stock transactions.View Full Posting Details