In: Accounting
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
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 |
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 |