The shareholders\' equity section of the balance sheet of Dodge, Inc. included t
ID: 2488786 • Letter: T
Question
The shareholders' equity section of the balance sheet of Dodge, Inc. included the following accounts at December 31, 2012:
Shareholders’ Equity $ in millions
Common stock, 80 million shares at $1 par, ............... $ 80
Paid-in capital – excess of par...................................... 560
Paid-in capital – reacquired shares................................ 1
Retained earnings.......................................................... 350
Required:
1. During 2013, Dodge reacquired shares of its common stock and later sold shares in two separate transactions. Prepare the entries for both the purchase and subsequent resale of shares, treated as both retired stock and treasury stock.
a. On March 6, 2013, Dodge reacquired 3 million shares of stock at $10 per share.
b. On September 3, 2013, the corporation sold 1 million shares at $11 per share.
c. On October 12, 2015, the corporation sold 1 million shares at $4 per share
Explanation / Answer
When stocks are retired:
March 6, 2013,
Debit Common Stock $3,000,000
Debit Paid in Capital in excess of Par $27,000,000
Credit Cash $30,000,000
(Stocks gets retired)
When treasury stocks acquired and sold again:
a. March 6,2013
Debit Treasury Stock $30,000,000
Credit Cash $30,000,000
b. Sept 3, 2013,
Debit Cash 11,000,000
Credit Treasury Stock $10,000,000
Credit Paid in Capital in excess of Par $1,000,000
c. Oct. 12, 2015,
Debit Cash $4,000,000
Debit Paid in Capital in excess of Par $6,000,000
Credit Treasury Stock $10,000,000
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