Several years ago, Douglas Company issued 33,000 shares of its $1 par value comm
ID: 2605411 • Letter: S
Question
Several years ago, Douglas Company issued 33,000 shares of its $1 par value common stock for $18 per share. In the current year, Douglas’s board of directors approves a plan to buy back a portion of these common stock shares. Prepare journal entries for each of the following transactions and events.
a. On Monday, Douglas buys back 2,500 shares for $35 per share.
b. On Tuesday, Douglas reissues 1,000 shares of treasury stock for $37 per share.
c. On Wednesday, Douglas reissues 500 shares of treasury stock for $34 per share.
d. On Thursday, Douglas reissues 600 shares of treasury stock for $28.
e. On Friday, the board of directors declares a cash dividend of $1.00 per share.
Explanation / Answer
Number Journal Entries Debit Credit a Share Capital Account 2,500.00 Additional Paid in Capital Account 42,500.00 General Reserve/Retained Profit Account 42,500.00 Cash/Bank Account 87,500.00 (Buys back 2,500 shares for $35 per share, where the par value is $1 and share premium per share is $ 17) b Cash/Bank Account 37,000.00 Treasury Stock Account 37,000.00 Reissues 1,000 shares of treasury stock for $37 per share. c Cash/Bank Account 17,000.00 Treasury Stock Account 17,000.00 Reissues 500 shares of treasury stock for $34 per share. d Cash/Bank Account 16,800.00 Treasury Stock Account 16,800.00 Reissues 600 shares of treasury stock for $28 e Dividend Account 30,500.00 Dividend Payable Account Declares a cash dividend of $1.00 per share (30500 Shares @ $ 1) 30,500.00 Working -J/E (a) Number of Shares Per Share Total Amount Cash/Bank Account 2500 35 87,500.00 Additional Paid in Capital Account 2500 -17 (42,500.00) Share Capital Account 2500 -1 (2,500.00) General Reserve/Retained Profit Account 2500 17 42,500.00
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