Houghton Company began business on January 1, 2015 by issuing all of its 1,550,0
ID: 2499894 • Letter: H
Question
Houghton Company began business on January 1, 2015 by issuing all of its 1,550,000 authorized shares of its $1 par value common stock for $30 per share. On June 30, Houghton declared a cash dividend of $1.25 per share to stockholders of record on July 31. Houghton paid the cash dividend on August 30. On November 1, Houghton reacquired 310,000 of its own shares of stock for $35 per share. On December 22, Houghton resold 155,000 of these shares for $41 per share. Record the issue of 1,550,000 authorized shares of $1 par value for $30 per share.Record the declaration of the cash dividends of $1.25 per share.Record the payment of the cash dividends of $1.25 per share.Record the repurchase of 310,000 shares for $35 per share.
Record the reissue of 155,000 share for 41 per share. .
Prepare the stockholders' equity section of the balance sheet as of December 31, 2015 assuming that the net income for the year was $8,000,000.
Explanation / Answer
Solution :
Date
Account Title
Debit
Credit
Jan1.
CASH (1550000*30)
46500000
COMMON STOCK (1550000*1)
1550000
ADDITIONAL PAID IN CAPITAL
44950000
Jun-30
RETAINED EARNING
1937500
DIVIDEND PAYABLE
1937500
(1550000*1.25)
Aug 30.
DIVIDEND PAYABLE
1937500
CASH
1937500
Nov 1.
TREASURY STOCK
10850000
CASH
10850000
(310000*35)
DEC 22.
CASH (155000*41)
6355000
TREASURY STOCK (155000*35)
5425000
ADDITIONAL PAID IN CAPITAL
930000
STOCKHOLDER EQUITY
1,550,000 common stock authorized and issued shares of its $1 par value
1550000
Additional Paid in Capital (44950000+930000)
45880000
Total
47430000
Less : Treasury stock (155000*35)
-5425000
Retained earning (8000000-1937500)
6062500
TOTAL STOCKHOLDER EQUITY
48067500
Date
Account Title
Debit
Credit
Jan1.
CASH (1550000*30)
46500000
COMMON STOCK (1550000*1)
1550000
ADDITIONAL PAID IN CAPITAL
44950000
Jun-30
RETAINED EARNING
1937500
DIVIDEND PAYABLE
1937500
(1550000*1.25)
Aug 30.
DIVIDEND PAYABLE
1937500
CASH
1937500
Nov 1.
TREASURY STOCK
10850000
CASH
10850000
(310000*35)
DEC 22.
CASH (155000*41)
6355000
TREASURY STOCK (155000*35)
5425000
ADDITIONAL PAID IN CAPITAL
930000
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