2. Carl Corporation designs and produces a line of golf equipment and golf appar

Question

2. Carl Corporation designs and produces a line of golf equipment and golf apparel. Carl has 150,000 shares of common stock outstanding as of the beginning of the year. Carl has the following transactions affecting stockholders’ equity during the year.

March 1 Issues 60,000 additional shares of $1 par value common stock for $50 per share. May 10 Repurchases 10,000 shares of treasury stock for $58 per share. June 1 Declares a cash dividend of $1.00 per share to all stockholders of record on June 15. July 1 Pays the cash dividend declared on June 1. October 21 Reissues 5,000 shares of treasury stock purchased on May 10 for $62 per share.

Required: Record each of these transactions (10 points).

Explanation / Answer

Solution :

Journal Entries - Carl Corporation Date Particulars Debit Credit 1-Mar Cash Dr $3,000,000.00       To Common Stock $60,000.00       To Paid in capital in excess of par - common stock $2,940,000.00 (To record issue of shares) 10-May Treasury stock Dr $580,000.00       To Cash $580,000.00 (To record purchase of own shares) 1-Jun Dividends Dr [(150000+60000-10000)*$1] $200,000.00       To Dividend payable $200,000.00 (To record cash dividend declared) 1-Jul Dividend payable Dr $200,000.00       To Cash $200,000.00 (To record payment of dividend) 21-Oct Cash Dr (5000*$62) $310,000.00       To Treasury Stock $290,000.00       To Additional paid in capital $20,000.00 (To record reissue of treasury shares)

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