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 and 5000 shares of preferred stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders’ equity in 2018.

March 1

Issues 65,000 additional shares of $1 par value common stock for $62 per share.

May 10

Repurchases 6,000 shares of treasury stock for $65 per share

May 21

Reissues 3,000 shares of treasury stock purchased on May 10 for $70 per share.

May 28

Issued 300 shares of preferred stock par value $50 8% for $ 85 per share.

June 1Declares a cash dividend of $2.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)J

July Pays the cash dividend declared on June 1.

journolize each transitions

Answer 1

Solution:

E 1 Power Drive Corporation 3 4 Journal Entries Credit Account Title and Explanation Debit 5 Date 01-Mar Cash Dr (65000 $62) $4,030,000 6 To Common Stock (65000 $1) $65,000 7 $3,965,000 To Paid in Capital in excess of Par- Common Stock 9 10-May Treasury Stock Dr (6000*$65) $390,000 10 $390,000 11 To Cash 12 21-May Cash Dr (3000 $70) $210,000 13 $195,000 14 To Treasury Stock (3000*$65) $15,000 15 To Paid in capital from Treasury stock 16 28-May Cash Dr (300*$85) $25,500 17 To Preferred Stock (300*$50) $15,000 18 $10,500 19 To Paid in Capital in excess of Par- Prederred Stock 20 21 01-Jun Cash Dividends Dr (100000+65000-6000+3000) * $2.00) $324,000 22 To Dividend payable $324,000 23 24 Dividend Payable Dr $324,000 25 01-Jul 26 To Cash $324,000 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Sheet27 (3) Sheet119 (10) 1) Sheet850 Sheet852 She