Problem 3-Shareholders Equity resented below is information related to NewCo Cor

Question

Problem 3-Shareholders Equity resented below is information related to NewCo Corp shareholder transactions during 2018 On January 1, the company was formed, and was authorized to issue 175,000 shares of $1 par value common stock. On January 2, 84,000 shares were issued for $16 per share. On March 31, NewCo issued a 1:3 reverse stock split On April 15, NewCo issued and distributed a 4% stock dividend, when the shares were valued at $16 per share On June 30, NewCo declared a cash dividend of $0.50, payable to the shareholders of record on July 15, to be paid on July 25 On August 2, the company purchases 855 shares of the common stock outstanding at $46 per share and retires the shares 1. 2. 3. 4. 5. 6. Instructions (a) Prepare the general journal entries necessary to record these transactions. Identify each transaction by the date, and if no entry is required, write "No Entry." (b) How many shares were outstanding as of December 31, 2018.

Explanation / Answer

01/01/2018 No Entry working 02/01/2018 Bank A/c dr 1344000 (84000*16) to Share Capital ($1) 84000 (84000*1) to Additional Paid-in-capital 1260000 (84000*15) 31/03/2018 Share Capital ($1) 84000 (84000*1) to Share Capital ($3) 84000 (28000*3) 15/04/2018 Dividend 3360 (84000*1*4%) to Bank 3360 (84000*1*4%) 30/04/2018 Dividend 14000 (28000*0.5) to Dividend Payable 14000 (28000*0.5) 25/07/2018 Dividend Payable 14000 to Bank 14000 02/08/2018 Share Capital ($3) 2565 (855*3) Additional Paid-in-capital 38475 (855*45) to Bank 39330 (855*46) to profit on purchase of own stock 1710 (855*2) No. of Shares outstanding Shares issued as on 2nd january 84000 Reverse stock split -84000 New shares issued due to Reverse stock split 28000 Purchase shares on 02nd August -855 Closing Balance 27145

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