[The following information applies to the questions displayed below.] Global Mar

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[The following information applies to the questions displayed below.]

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $300,000 of net income and the following selected transactions occurred in the order given:

Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

[The following information applies to the questions displayed below.]

Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $300,000 of net income and the following selected transactions occurred in the order given:

a. Issued 120,000 shares of the common stock at $45 cash per share. b. Reacquired 15,000 shares at $40 cash per share. c. Reissued 5,000 shares from treasury for $41 per share. d. Reissued 5,000 shares from treasury for $39 per share.

Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

Explanation / Answer

Cash Dr 5400000               Common Stock Cr 600000               Paid in Capital in Excess of Par Cr 4800000 ( To record issuance of 120000 commonstock of par value 5 at 45) Treasury stock Dr 600000                      Cash Cr 600000 ( To record reacquiring 15000 shares at $ 40) Cash Dr 205000                  Treasury stock Cr 200000               Paid in Capital for treasury stock Cr 5000 ( To record reissuance of 5000 shares at $ 41) Cash Dr 195000 Paid in capital for treasury stock Dr 5000                  Treasury stock Cr 200000 ( To record reissuance of 5000 shares at $ 39) Based on the above , below is the stockholders equity section Stockholders equity section Paid in Capital               Common Stock 600000               Paid in Capital in Excess of Par 4800000 Retained earning 300000 Less : Treasury stock Reacquired 600000 Less : Reissued at 41 200000 Less : Reissued at 39 200000 200000 Total stockholders equity 5500000

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