[The following information applies to the questions displayed below. Global Mari
ID: 2594628 • Letter: #
Question
[The following information applies to the questions displayed below. Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of common stock, $5 par value. During the first year, the company earned $370,000 of net income and the following selected transactions occurred in the order given: a. Issued 110,000 shares of the common stock at $52 cash per share. b. Reacquired 22,000 shares at $47 cash per share. c. Reissued 8,500 shares from treasury for $48 per share. d. Reissued 8,500 shares from treasury for $46 per share.Explanation / Answer
Global Marine
Balance Sheet (Partial)
at December 31
Stockholders' Equity
Contributed Capital:
Common Stock
Issued and Outstanding
$550,000
Additional Paid-in Capital
$5,170,000
Total Contributed Capital
$5,720,000
Retained Earnings
$370,000
Total
$6,090,000
Less: Treasury Stock (at cost)
$235,000
Total Stockholders' Equity
$5,855,000
Working:
Entries to record the transactions:
Common Stock $550,000
Additional Paid-in Capital $5,170,000
(To record issue of 110,000 shares at par $5 each and additional paid-in capital of $47)
Cash $1,034,000
(To record acquisition of 22,000 treasury stock at $7 per share)
Treasury Stock $399,500 ($47 x 8,500)
Additional Paid-in Capital $8,500 ($1 x 8,500)
(To record the reissue of 8,500 shares at $48 price, $47 at cost, $1 additional paid-in capital)
Additional Paid-in Capital $8,500($1 x 8,500)
Treasury Stock $399,500 ($47 x 8,500)
(To record the reissue of 8,500 shares at $46 per share, $47 cost and $1 additional paid-in capital)
Global Marine
Balance Sheet (Partial)
at December 31
Stockholders' Equity
Contributed Capital:
Common Stock
Issued and Outstanding
$550,000
Additional Paid-in Capital
$5,170,000
Total Contributed Capital
$5,720,000
Retained Earnings
$370,000
Total
$6,090,000
Less: Treasury Stock (at cost)
$235,000
Total Stockholders' Equity
$5,855,000
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