22. Power Drive Corporation designs and produces a line of golf equipment and go

Question

22.

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018.

March 1 Issues 59,000 additional shares of $1 par value common stock for $56 per share.

May 10 Repurchases 5,400 shares of treasury stock for $59 per share.

June 1 Declares a cash dividend of $1.70 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)

July 1 Pays the cash dividend declared on June 1.

October 21 Reissues 2,700 shares of treasury stock purchased on May 10 for $64 per share.

  
Required:

Record each of these transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Explanation / Answer

Solution:

Journal Entries - Power Drive Corporation Date Particulars Debit Credit 1-Mar Cash Dr (59,000*$56) $3,304,000.00              To Common Stock $59,000.00              To Paid in capital in excess of par - common stock $3,245,000.00 (To record issue of common share) 10-May Treasury Stock Dr (5400*$59) $318,600.00              To Cash $318,600.00 (To record purchase of trasury shares) 1-Jun Retained earnings Dr [(100,000+59,000-5,400)*$1.70] $261,120.00              To Dividend Payable $261,120.00 (Being dividend declared on common stock) 1-Jul Dividend Payable Dr $261,120.00              To Cash $261,120.00 (To record payment of dividend) 21-Oct Cash Dr (2,700*$64) $172,800.00              To Treasury stock (2700*$59) $159,300.00              To Additional Paid in Capital $13,500.00 (To record reissue of treasury shares)

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