Question

On January 1, 2022, The Eighties Shop has 100,000 shares of common stock outstanding. The Eighties Shop incurred the following transactions in 2022.

March 1 Issues 53,000 additional shares of $1 par value common stock for $50 per share.
May 10 Purchases 4,800 shares of treasury stock for $53 per share.
June 1 Declares a cash dividend of $1.40 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 2,400 shares of treasury stock purchased on May 10 for $58 per share.

Required:
Record each of these transactions.

Answer 1

Answer:

Date        General Journal                Debit            Credit

March 1   Bank A/c                        $2,650,000

                  (53,000 × $50)

                       Share Capital A/c                            $53,000

                        (53,000 × $1)

                        Share Premium A/c                        $2,597,000

                        [53,000 × $49 ($50 - $1)}  

                (Being additional 53,000 issued shares for $50)

May 10     Treasury Stock A/c            $254,400

                (4,800 × $53)

                        Cash A/c (4,800 × $53)                  $254,400

               (Being purchase of 4,800 treasury stock for $53 )    

June 1       Retained Earning A/c        $207,480  

                 (1,53,000- 4,800) × $1.4

                          Dividend Payable A/c                   $207,480

                           [(153,000 - 4,800) × $1.4]

                 (Being cash dividend declared)

July 1        Dividend Payable A/c       $207,480

                           Cash A/c                                        $207,480

                 (Being cash dividend paid)

October 21  Cash A/c (2,400 × $58)   $139,200

                          Treasury Stock (2,400 × $53)          $127,200

                          Paid in Capital from treasury Stock $12,000

                           (2400 × $5)

                    (Being 2,400 Treasury Stock sold for $58)

Answer 2

The Eighties Shop will record the journal entries for the 2022 transactions as follows:

Journal Entries:

March 1 Debit Cash $2,650,000

Credit Common Stock $53,000

Credit Additional Paid-in Capital $2,597,000

• To record the issuance of 53,000 shares at $50 per share.

May 10 Debit Treasury Stock $4,800

Debit Additional Paid-in Capital $249,600

Credit Cash $254,400

• To record the purchase of 4,800 shares of treasury stock at $53 per share.

June 1 Debit Dividend $207,480

Credit Dividends Payable $207,480

• To record the declaration of cash dividends on 148,200 shares at $1.40 per share.

July 1 Debit Dividends Payable $207,480

Credit Cash $207,480

• To record the payment of dividends.

Oct. 21 Debit Cash $139,200

Credit Treasury Stock $2,400

Credit Additional Paid-in Capital $136,800

• To record the resale of 2,400 shares of treasury stock at $58 per share.

Data and Calculations:

Outstanding Common Stock = 100,000 shares

March 1 Cash $2,650,000 Common Stock $53,000 Additional Paid-in Capital $2,597,000

May 10 Treasury Stock $4,800 Additional Paid-in Capital $249,600 Cash $254,400

June 1 Dividend $207,480 Dividends Payable $207,480 (148,200 x $1.40)

July 1 Dividends Payable $207,480 Cash $207,480

Oct. 21 Cash $139,200 Treasury Stock $2,400 Additional Paid-in Capital $136,800

Learn more: https://brainly.com/question/25562729