Houghton Company began business on January 1, 2015 by issuing all of its 1,350,0
ID: 2476976 • Letter: H
Question
Houghton Company began business on January 1, 2015 by issuing all of its 1,350,000 authorized shares of its $1 par value common stock for $26 per share. On June 30, Houghton declared a cash dividend of $2.50 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 270,000 of its own shares of stock for $31 per share. On December 22, Houghton resold 135,000 of these shares for $37 per share.
the second to last option on the balance sheet is Add: Treasury stock or Less: Treasury Stock
Explanation / Answer
Journal entries
1.Dr Cash $35,000,000
Cr Common Stock $ 1,350,000
Cr PAid in capital in Excess of Par $33,750,000
2.
Dr Retained earnings3,375,000
Cr Dividend Payable 3,375,000
3.
Dr Dividend payable 3,375,000
Cr cash 3,375,000
4.
Dr Treasury Stock $8,370,000
Cr Cash $8,370,000
5.
Dr Cash $4,995,000
Cr Treasury Stock $4,185,000
Cr Paid in capital from treasury Stock 810,000(135,000*(37-31)
b.
Stockholders' equity
Paid-in capital
Capital Stock
Common Stock , $1 par value, 1,350,000 issuing all authorized shares 35,000,000
Additional paid in capital
In excess of par 33,750,000
Treasury stock 810,000
Retained earnings
Toatl paid in capital and retained earnings 3,375,000
Less: Traesury stocks(135,000 shares) 4,185,000
Total Stockholder's equity 68,750,000
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