As of 01-01-16, Mallory Corporation is authorized to issue an additional 750,000 shares of its $1...
- As of 01-01-16, Mallory Corporation is authorized to issue an additional 750,000 shares of its $1 par value common stock. During 2016, Mallory entered into the following transactions:
- Issued 250,000 shares of common stock at $32 per share, less $125,000 of stock issuance costs.
- Purchased 50,000 shares of treasury stock at $30 per share. This was Mallory’s first treasury stock purchase. Mallory uses the cost method to account for treasury stock transactions.
Prepare the entries Mallory should make for these transactions.
Homework Answers
| The journal entries are recorded based on accounting rules in which all expenses, assets, losses are debited for increase and revenue, liabilities, equity, gain are credited for increase | |||||
| Journal entry to record issue of shares | |||||
| General Journal | Debit | Credit | |||
| Cash ((250,000*32)-125000) | $7,875,000 | ||||
| Common stock (250000*1) | $250,000 | ||||
| Additional paid in capital | $7,625,000 | (7875000-250000) | |||
| (To record common stock issued) | |||||
| Journal entry to record treasury shares purchased | |||||
| General Journal | Debit | Credit | |||
| Treasury stock (50,000*30) | $1,500,000 | ||||
| Cash | $1,500,000 | ||||
| (To record treasury shares purchased) | |||||
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As of 01-01-16, Mallory Corporation is authorized to issue an
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