Homework Corporation had the following equity section of the balance sheet:

Common Stock, 10,000 shares outstanding 150,000

Retained Earnings 600,000

Total Equity 750,000

The following transactions took place

The company issued 1,000 shares of common stock for $90 per share
The company declared a $2.00 per share cash dividend
The company paid the dividend
The company declared and issued a 3:1 stock split
The company purchased 500 shares of company stock for $40 per share
The company declared a $1.00 per share cash dividend
The company announced their net income of $250,000 (no JE needed)

Required

Prepare journal entries for the above transactions

Calculate the balances for stockholders’ equity

Calculate book value per share

Trans	Accounts	Debit	Credit
1


2


3


4	No JE needed

5


6

Stockholders’ Equity

Common Stock
Retained Earnings
Treasury Stock
Total Equity
Number of Shares
Book Value Per Share

Expert Solution

Jounral Entries ($)
1.	Cash Dr (90×1000)	90,000
	To Common Stock (15×1000)		15,000
	To Additional Paid in Capital (75×1000)		75,000
	(Shares issued)

2.	Retained Earnngs Dr (10,000+1000)×2	22,000
	To Dividends Payable		22,000
	(Dividends declared)

3.	Dividends Payable Dr	22,000
	To Cash		22,000
	(Dividends Paid)

4.	NO ENTRY REQUIRED as only par value per share changes from $ 15 to 5 and number of shares rise from 11,000 to 33,000 shares

5.	Treasury Stock Dr(40×500)	20,000
	To Cash		20,000
	(Own stock purchased)

6.	Retained Earnings Dr (33,000-500)*1	32,500
	To Dividends Payable		32,500
	(Dividends Declared on outstanding shares)

Shareholders' Equity

Common Stock (33,000*5)	$ 165,000
Additional Paid in capital	75,000
Retained Earnings (600,000-22,000-32,500+250,000)	795,500
Treasury Stock	(20,000)
Total equity	1015,500
Number of shares outstanding	32,500
Book value per share	31.25

ekkarill92 answered 1 year ago

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