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 as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.   
  

March		1		Issues 65,000 additional shares of $1 par value common stock for $62 per share.
May		10		Purchases 6,000 shares of treasury stock for $65 per share.
June		1		Declares a cash dividend of $2.00 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 3,000 shares of treasury stock purchased on May 10 for $70 per share.

Journal entry

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

2. Record the purchase of 6,000 shares of treasury stock for $65 per share.

3. Record the declaration of a cash dividend of $2.00 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

4. Record payment of the cash dividend declared on June 1.

5. Record the resale of 3,000 shares of treasury stock purchased on May 10 for $70 per share.

Answer 1

No.	Date	General Journal	Debit	Credit
1	Mar. 1	Cash (65000 x $62)	4030000
		Common stock (65000 x $1)		65000
		Paid-in capital in excess of par-common stock		3965000
		(To record issuance of additional common stock)
2	May. 10	Treasury stock	390000
		Cash (6000 x $65)		390000
		(To record purchase of treasury stock)
3	Jun. 1	Cash dividends [$2.00 x (100000 + 65000 - 6000)]	318000
		Cash dividends payable		318000
		(To record cash dividends declared)
4	Jul. 1	Cash dividends payable	318000
		Cash		318000
		(To record payment of cash dividends declared)
5	Oct. 21	Cash (3000 x $70)	210000
		Treasury stock (3000 x $65)		195000
		Paid-in capital from treasury stock		15000
		(To record sale of treasury stock)