(Learning Objectives 2, 3, 4: Account for issuance of stock; show how treasury s
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Question
(Learning Objectives 2, 3, 4: Account for issuance of stock; show how treasury stock affects a company; account for dividends) At December 31, 2012, Blumenthal Corporation reported the stockholders’ equity accounts shown here (with dollar amounts in millions, except per-share amounts)
Blumenthal’s 2013 transactions included the following:
a.Net income, $450 million
b.Issuance of 22 million shares of common stock for $14.00 per share
c.Purchase of 9 million shares of treasury stock for $18 million
d.Declaration and payment of cash dividends of $32 million
? Requirement
1.Journalize Blumenthal’s transactions in b, c, and d. Explanations are not required.
Common stock $3.00 par value per share, 2,400 million shares issud.. Capital in excess of par value 7,200 7,200 290 (80) Total stockholders' equity$14,610 Treasury stock, at cost.Explanation / Answer
(Amount in Millions) Journal Entry Date Particulars Dr Amount Cr Amount (a) Profit & Loss A/c Dr. $450 To Retained Earnings A/c $450 (Profit Earned during the year transferred to retained earnings) (b) Bank A/c Dr. $308 To Common Stock A/c $66 To Capital in excess of par Value $242 (22 Million Shares issued @ $14 per Share) (c) Treasury Stock A/c Dr. $27 To Bank A/c $18 To Capital in excess of par Value A/c $9 (9 Million Shares purchased) (d) Dividend A/c Dr. $32 To Bank A/c $32 (dividend paid during the year)
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