Question On Jan 1, 2016 Alberta corp. start it is operation, the board of direct

ID: 2597259 • Letter: Q

Question

Question On Jan 1, 2016 Alberta corp. start it is operation, the board of directors authorized to is sue 30,000 common shares; Strait corp. had the following transaction During 2016: 1) Jan 1, 2016 Issued and sold 5000 common shares At $10 for cash 2) Feb 1, 2016 Issued and sold 6000 common shares At $16 for cash 3) March 1, 2016 repurchase and cancel 1000 of it is common shares at price $10 per share 4) On August 1, 2016 the board declared cash dividend of $1.00 per common share, on the date of record Sept, 1,2016. the dividend paid on Oct, 1,2016 5) Dec 1, 2016 repurchase and cancel 1000 of it is common shares at price $16 per share Required: Prepare journal entries for each of the transactions listed above. Prepare partial Statement of financial postion, showing the Shareholders equity portion only.

Explanation / Answer

Par Value of stock is $10 (assumed) as it is not given in question.

Journal Entry:

Cash Dr 50000 (5000*10)

Common stock Cr 50000

Cash Dr 96000 (6000*16)

Common stock Cr 60000 (6000*10)

Paid in excess of par value Cr 36000 (6000*6)

Treasury stock Dr 10000 (1000*10)

Cash Cr 10000

Retained Earnings Dr 10000 (5000+6000-1000)*1

Cash Cr 10000

Treasury stock Dr 16000 (1000*16)

Cash Cr 16000

Statement of Stockholders' equity:

Particulars

Amount ($)

Paid in Capital

Issue of shares (5000 + 1000) $10 par value

60000

Paid in capital in excess of par value (6000*6)

36000

Total Paid in Capital

96000

Retained Earnings

(10000)

Subtotal

86000

Treasury Stock

(26000)

Total stockholders’ equity

60000