Presented below is information related to NewCo Corp shareholder transactions du

Question

Presented below is information related to NewCo Corp shareholder transactions during 2018: 1. On January 1, the company was formed, and was authorized to issue 150,000 shares of $1 par value common stock. On January 2,75,000 shares were issued for $17 per share. On March 31, NewCo issued a 1:3 reverse stock split On April 15, NewCo issued and distributed a 3% stock dividend, when the shares were valued at $15 per share. On June 30, NewCo declared a cash dividend of $0.40, payable to the shareholders of record on July 15, to be paid on July 25 On August 2, the company purchases 845 shares of the common stock outstanding at $47 per share and retires the shares. 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

Answer a Date Account Titles Debit Credit Jan.1,2018 No Entry Shares outstanding = 0 Jan.2,2018 Cash $1,275,000.00 Common stock $75,000.00 Additional Paid in Capital - Common stock $1,200,000.00 (to record issue of 75000 shares , $1 par for $17 per share) Shares outstanding = 75000 March 31,2018 No entry Shares outstanding = 25000 April 15,2018 Retained Earnings $11,250.00 Common stock $750.00 Additional Paid in Capital - Common stock $10,500.00 (to record issue and distribution of 3% stock dividend) Shares outstanding = 25750 June 30,2018 Retained Earnings $10,300.00 Dividend payable $10,300.00 (to record issue of $0.40 per share cash dividend) Shares outstanding = 25750 July 25,2018 Dividend payable $10,300.00 Cash $10,300.00 (to record payment of cash dividend) Aug.2,2018 Treasury Stock $39,715.00 Cash $39,715.00 (to record purchase of 845 shares @ $47 per share) Shares outstanding = 25750-845 = 24905 Aug.2,2018 Common stock $2,535.00 Additional Paid in Capital - Common stock $40,560.00 Treasury Stock $39,715.00 Retained Earnings $3,380.00 (to record retirement of 845 shares using cost method) Shares outstanding = 24905 Answer b Shares outstanding as of Dec.31,2018 = 24905

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