Question

Knapp Industries began business on January 1, 2018 by issuing all of its 1,850,000 authorized shares of its $1 par value common stock for $36 per share. On June 30, knapp declared a cash dividend of $2.75 per share to stockholders of record on July 31. Knapp paid the cash dividend on August 30. On November 1, Knapp reacquired 370,000 of its own shares of stock for $41 per share. On December 22, Knapp resold 185,000 of these shares for $47 per share. Required: a. Prepare all of the necessary journal entries to record the events described above. b. Prepare the stockholders' equity section of the balance sheet as of December 31, 2018 assuming that the net income for the year was $11,000,000 Complete this question by entering your answers in the table below. Required A Required B Prepare all of the necessary Journal entries to record the events described above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet B C D E Record the issue of 1,850,000 authorized shares of $1 par value for $36 per share. Note: Enter debits before credits

Answer 1

Solution: 1
	Journal Entries
	Sr. No.	Date	Account Title and explanation	Debit	Credit
	1	Jan 01, 2018	Cash (18,50,000 Shares X $ 36)	$6,66,00,000
			Common Stock (1,850,000 X 1)		$18,50,000
			Paid in Capital in excess of par - Common Stock		$6,47,50,000
			(Record the purchae of Common stock)
	2	June, 30	Retained Earnings (1,850,000 X $ 2.75)	$50,87,500
			Dividend Payable		$50,87,500
			(Reocrd the dividend declaration)
	3	July, 31	"No Journal Entry is Required"
			Dividend Payalbe	$50,87,500
	4	August, 30	Cash		$50,87,500
			(Record the dividend paid)
	5	November, 01	Treasurry stock (370,000 shares X $41)	$1,51,70,000
			Cash		$1,51,70,000
			(To Record the purchase of treasurry Stock)
			Cash (185000 Shares X $ 47)	$86,95,000
	6	December, 22	Treasurry Stock (185000 Shares X $ 41)		$75,85,000
			Addittional Paid in Capital - Treasurry Stock		$11,10,000
			(To Record the sale of treasurry Stock)
Solution: 2
			STOCKHOLDER'S EQUITY
			Paid in Capital :
			Common Stock	$           18,50,000.0
			Paid in capital in excess of par - Common Stock	$       6,47,50,000.0
			Paid in capital in excess of par - Treasury Stock	$           11,10,000.0
			Total Contributed Capital	$       6,77,10,000.0
			Retained Earnings	$           59,12,500.0
			Total	$       7,36,22,500.0
			Less: Treasury Stock	$           75,85,000.0
			Sharehodler's Equity	$       6,60,37,500.0