Question

{The following information applies to the questions displayed below) 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 $330,000 of net income and the following selected transactions occurred in the order given: a. Issued 120,000 shares of the common stock at $48 cash per share. b. Reacquired 18,000 shares at $43 cash per share. C Reissued 6,500 shares from treasury for $44 per share. d. Reissued 6.500 shares from treasury for $42 per share value 3.33 points Rec Required: 1. Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.) Assets Liabilities Stockholders' Equity / / TN / / b. / TI / 1111111 11 / / d. /

Answer 1

			Asset		=	Liabilities		+	Stockholders Equity
		a	Cash	$5,760,000					Common Stock	$600,000
									Additional paid in capital	$5,160,000
		b	Cash	-$774,000					Treasury Stock	-$774,000
		c	Cash	$286,000					Treasury Stock	$279,500
									Additional paid in capital-Treasury Stock	$6,500
		d	Cash	$273,000					Additional paid in capital-Treasury Stock	-$6,500
									Treasury Stock	$279,500
	JOURNAL ENTRY
	Ref	Account Title and Explanation	Debit	Credit
	1	Cash	$5,760,000		(120000*48)
		Common Stock		$600,000	(120000*5)
		Additional paid in capital		$5,160,000	(5760000-600000)
		(To record issuance of 120000 shares at $48 per share)
	2	Treasury Stock	$774,000		(18000*43)
		Cash		$774,000
		(To record purchase of 18000 common shares at $43 each)
	3	Cash	$286,000		(6500*44)
		Treasury Stock		$279,500	(6500*43)
		Additional paid in capital-Treasury Stock		$6,500	(286000-279500)
		(To record reissuance of 6500 treasury stock at $44 per share)
	4	Cash	$273,000		(6500*42)
		Additional paid in capital-Treasury Stock	$6,500		(279500-273000)
		Treasury Stock		$279,500	(6500*43)
		(To record reissuance of 6500 treasury stock at $42 per share)
		STOCKHOLDERS EQUITY
		Contributed Capital
		120000 shares par value $5 per share	$600,000
		Additional Paid in capital	$5,160,000
		Less:Treasury Stock	$0	(774000-279500-279500)
		Total Contributed Capital	$5,760,000
		Retained Earnings	$330,000
		Stockholders Equity	$6,090,000