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 1 Issues 46,000 additional shares of $1 par value common stock for $43 per share 10 Purchases 4,100 shares of treasury stock for $46 per share. 1 Declares a cash dividend of $1.05 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) 1 Pays the cash dividend declared on June 1. March May June July October 21 Resells 2,050 shares of treasury stock purchased on May 10 for $51 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.) View transaction list Journal entry worksheet 1 2 3 4 5 Record the issuance of 46,000 additional shares of $1 par value common stock for $43 per share. Note: Enter debits before credits. Date Credit General Journal Debit March 01, 2021

5 required entries:

1. Record the issuance of 46,000 additional shares of $1 par value common stock for $43 per share.

2. Record the purchase of 4,100 shares of treasury stock for $46 per share.

3. Record the declaration of a cash dividend of $1.05 per share to all stockholders of record on June 15.

4. Record payment of the cash dividend declared on June 1.

5. Record the resale of 2,050 shares of treasury stock purchased on May 10 for $51 per share.

Answer 1

Date General Journal Debit Credit $ 1,978,000 Mar-01 Cash Common Stock Additional paid in capital, Common Stock (Additional shares issued) $ $ 46,000 1,932,000 $ 188,600 May-10 Treasury Sock Cash (Treasury sock purchased) $ 188,600 $ 148,995 Jun-01 Retained Earnings Dividends payable (Dividend declaration recorded) $ 148,995 $ 148,995 Jul-01 Dividends payable Cash (cash paid for the dividend declared) $ 148,995 $ 104,550 $ Oct-21 Cash Treasury Stock Additional Paid in Capital treasury stock (Treasury stock resold ) 94,300 10,250 $

Working Notes: Additional issue of Common Stock at par = 46000 *$ 1 = 46000 Additional paid in capital, Common Stock = 46000 * ( $ 43-1 ) = $ 1932000 No. of Shares outstanding on record on June 15 Common shares outstanding, beginning Add : Additional issue of common stock Less: Treasury Stock purchased No. of shares out standing 100000 46000 -4100 141900 Amount of Dividend = No. of shares outstanding * dividend per share = 141900*$ 1.05 = 148995 Additional paid in capital, Treasury Stock = ( $ 51- $46) * 2050 = $ 10,250