E10-9 Power Drive Corporation designs and produces a line of golf equipment and

Question

E10-9 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 2018Power Drive has the following transactions affecting stockholders' equity in 2018. March 1 Issues 65,000 additional shares of $1 par value common stock for $62 per share. May 10 Repurchases 6,000 shares of treasury stock for $65 per share. June 1 Declares a cash dividend of $2.00 per share to all stockholders of record on Record c treasury stock, and cash 0-A 10-5) July 1 October 21 June 15. (Hint: Dividends are not paid on treasury stock.) Pays the cash dividend declared on June 1. Reissues 3,000 shares of treasury stock purchased on May 10 for $70 per share.

Explanation / Answer

March 1 Cash(65,000×$62) $4,030,000    Common stock(65000×$1) $65,000 Paid in capital in excess of par-common stock(65000×$61) $3,965,000 (To record issue of common stock) May 10 Treasury stock(6000×$65) $390,000 Cash $390,000 (To record purchase of Treasury stock) June 1 Retained earnings{(100,000+65,000-6000)×$2} $318,000 Dividend payable $318,000 (To record dividend declared) July 1 Dividend payable $318,000 Cash $318,000 (To record payment of dividend) Oct 21 Cash(3000×$70) $210,000 Treasury stock(3000×$65) $195,000 Paid in capital-Treasury stock(3000×$5) $15,000 (To record reissue of Treasury stock)

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