Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

 March 1 Issues 62,000 additional shares of $1 par value common stock for $59 per share.

 May 10 Purchases 5,700 shares of treasury stock for $62 per share.

 June 1 Declares a cash dividend of $1.85 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

 July 1 Pays the cash dividend declared on June 1.

 October 21 Resells 2,850 shares of treasury stock purchased on May 10 for $67 per share. 

Required: 

Record each of these transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Date	Account Titles and Explanation	Debit	Credit
March 1	Cash	$3,658,000		(62,000 x $59)
	Common Stock		$62,000	(62,000 x $1)
	Paid-in capital in excess of par – common stock		$3,596,000	Balance
	(To record issue of common stock)
May 10	Treasury Stock	$353,400		(5,700 x $62)
	Cash		$353,400
	(To record purchase of treasury stock)
June 1	Retained Earnings	$289,155		((162,000 - 5,700) x $1.85)
	Dividend Payable		$289,155
	(To record declare of dividends)
July 1	Dividend Payable	$289,155
	Cash		$289,155
	(To record payment of dividends)
Oct 21	Cash	$190,950		(2,850 x $67)
	Treasury Stock		$176,700	(2,850 x $62)
	Paid-in Capital - Treasury Stock		$14,250	Balance
	(To record sale of treasury stock)