Question

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 $380,000 of net income, declared no dividends, and the following selected transactions occurred in the order given:

Issued 100,000 shares of the common stock at $53 cash per share.

Reacquired 23,000 shares at $48 cash per share.

Reissued 9,000 shares from treasury for $49 per share.

Reissued 9,000 shares from treasury for $47 per share.

Prepare journal entries to record each transaction

Answer 1

Solution:

Global Marine
Journal Entries
Date	Account Title and Explanation	Debit	Credit
a.	Cash Dr (100,000*$53)	$53,00,000
	To Common Stock (100,000*$5)		$5,00,000
	To Shares Premium - Ordinary		$48,00,000
	(To record issue of shares)
b.	Treasury Stock Dr (23000*$48)	$11,04,000
	To Cash		$11,04,000
	(To record purchase of Treasury stock)
c.	Cash Dr (9000*$49)	$4,41,000
	To Treasury Stock (9000*$48)		$4,32,000
	To Paid in Capital from Treasury Stock		$9,000
	(To record reissue of 9000 shares)
d.	Cash Dr (9000*$47)	$4,23,000
	Paid in Capital from Treasury Stock Dr	$9,000
	To Treasury Stock (9000*$48)		$4,32,000