Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of commc stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021. March 1 Issues 55,000 additional shares of $1 par value common stock for $52 per share. May 10 Purchases 5,000 shares of treasury stock for $55 per share. June 1 Declares a cash dividend of $1.50 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 2,500 shares of treasury stock purchased on May 10 for $60 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 55,000 additional shares of $1 par value common stock for $52 per share. Note: Enter debits before credits. General Journal Debit Credit Date March 01, 2021

Answer 1

Solution:

Journal Entries - Power Drive Corporation
Date	Particulars	Debit	Credit
1-Mar	Cash Dr	$2,860,000.00
	To Common stock		$55,000.00
	To Paid in capital in excess of par - Common stock		$2,805,000.00
	(To record issue of common stock)
10-May	Treasury stock Dr	$275,000.00
	To Cash		$275,000.00
	(To record purchase of own stock)
1-Jun	Dividends Dr (150000*$1.50)	$225,000.00
	To Dividend payable		$225,000.00
	(To record declaration of dividends)
1-Jul	Dividend payable Dr	$225,000.00
	To Cash		$225,000.00
	(To record dividend payment)
21-Oct	Cash Dr	$150,000.00
	To Treasury stock		$137,500.00
	To Paid in capital from treasury stock		$12,500.00
	(To record resale of treasury stock)