Question

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $500,000 of net income, declared no dividends, and the following selected transactions occurred in the order given:

1. Issued 110,000 shares of the common stock at $65 cash per share.
2. Reacquired 35,000 shares at $60 cash per share.
3. Reissued 15,000 shares from treasury for $61 per share.
4. Reissued 15,000 shares from treasury for $59 per share.

2. Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Record the issuance of 110,000 shares of common stock with a $5 par value for a price of $65 per share.

Record the purchase of 35,000 shares of previously issued common stock for a price of $60 per share.

Record the re-issuance of 15,000 shares of treasury stock previously purchased for a price of $60 per share and sold for $61 per share.

Record the re-issuance of 15,000 shares of treasury stock previously purchased for $60 per share and sold for $59 per share.

3. Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

account titles and explanation credit debit calculation 2 no cash 110,000 $65 $7,150,000 а $550,000 $6,600,000 110,000*$5 common stock 110,000*$60 Paid-in capital in excess of par value, common stock (to record issue of common stock) $2,100,000 35,000*$60 b treasury stock $2,100,000 cash (to record purchase of treasury stock) cash 15,000 $61 $915,000 C treasury stock Paid-in capital treasury stock (to record sale of treasury stock) $900,000 $15,000 15,000*$60 $915,000-$900,000 cash $885,000 $15,000 15,000*$59 d Paid-in capital - treasury stock $900,000-$885,000 treasury stock (to record sale of treasury stock) 15,000 $60 $900,000

Global Marine Balance Sheet (Partial) as of December 31, Year 1 Stockholders' Equity Common stock-$5 par value, 1,000,000 shares authorized, 110,000 shares issued Paid-in capital in excess of par value, common stock Total Paid-in capital Retained Earnings Total Paid-in capital and Retained Earnings $550,000 $ 6,600,000 $ 7,150,000 $500,000 $ 7,650,000 Less: Treasury Stock (5,000 shares of $60 each) Total Stockholders' Equity -$ 300,000 $ 7,350,000