Question

In: Accounting

Bella Donna Company has 100,000 shares of $4 par common stock issued and outstanding as of...

Bella Donna Company has 100,000 shares of $4 par common stock issued and outstanding as of January 1, 2018. The shares were originally issued for $9 per share. On February 3, 2018, Bella Donna repurchased 3,690 shares at $6 per share for the purposes of retiring them. What will be the balance in Paid in capital in excess of par after February 3rd transaction?

PLEASE SHOW ALL WORK AND EXPLAIN, THANK YOU

Solutions

Expert Solution

Date General Journal Debit Credit
January 1, 2018 Cash $900,000
Common stock $400,000
Pain in capital, in excess or par $500,000
February 3, 2018 Treasury stock $23,760
Cash $23,760
February 3, 2018 Common stock $15,840
Paid in capital, in excess of par $7,920
Treasury stock $23,760

On January 1, 2018 when shares are issued, paid in capital in excess of par is credited by = Number of shares issued x ( issue price per share - Par value per share)

= 100,000 x (9-4)

= $500,000

On February 3, 2018 when shares are retired, common stock will be debited by par value of shares i.e $4 per share.

Share have been repurchased at $6 per share, thus remaining $2 per share will be debited to paid in capital in excess of par.

Thus, common stock will be debited on February 3 by = 3,690 x 4

= $15,840

paid in capital in excess of par will be debited of February 3 by = 3,690 x 2

= $7,920

paid in capital in excess of par balance after February 3 transaction = 500,000 - 7,920

= $492,080

Kindly comment if you need further assistance.

Thanks‼!

ekkarill92 answered 3 days ago
Next > < Previous

Related Solutions

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9...
A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9 per share.  Subsequently, the company declared and issued a 10% stock dividend. The market price of the shares is $20 per share. 53. What is the effect of the dividend on Paid in Capital?    a. Paid-in Capital decreased b. Paid-in Capital increased c. Paid-in Capital remained the same d. None of the above 54. Refer to the previous question. By what amount did Paid...
Morris Company has the following capital structure: Common stock, $2 par, 100,000 shares issued and outstanding...
Morris Company has the following capital structure: Common stock, $2 par, 100,000 shares issued and outstanding On October 1, 2020, the company declared a 5% common stock dividend when the market price of the common stock was $10 per share. The stock dividend will be distributed on October 15, 2020, to stockholders on record on October 10, 2020. Upon declaration of the stock dividend, Norris Company would record: A. A debit to Retained Earnings for $200,000 B. A credit to...
Baker Company has common and preferred stock outstanding as follows. Common stock: 100,000 shares, $30 par...
Baker Company has common and preferred stock outstanding as follows. Common stock: 100,000 shares, $30 par value 8 percent preferred stock: 10,000 shares, $100 par value Dividends on preferred stock have not been paid for the last three years (in addition to the current year). a. If the company pays a total of $120,000 in dividends, how much will the common stockholders receive per share if the preferred stock is not cumulative? (Round your answer to 2 decimal places.) b....
The Monroe Corporation has 100,000 common shares issued and outstanding. This stock was issued several years...
The Monroe Corporation has 100,000 common shares issued and outstanding. This stock was issued several years ago at a price above the $10 per share par value. During the current year, the board of directors declared a 30 percent stock dividend so that 30,000 new shares were issued to the stockholders when the price of the stock was $30 per share. As a result of this dividend, what reduction was recorded in the reported amount of retained earnings ? __$600,000...
Casio Company has 30,000 shares of $1 par common stock issued and outstanding. The company also...
Casio Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% cumulative preferred stock outstanding. The company did not pay the preferred dividends in 2017, 2018 and 2019. On December 1, 2020, the company’s board of directors declared that $200,000 will be paid as dividend on January 17, 2021. What amount of dividends would common stockholders earn? * a) $200,000 b) $150,000 c) $125,000 d) $100,000
create journal entries: Common stock—$10 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $...
create journal entries: Common stock—$10 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 550,000 Paid-in capital in excess of par value, common stock 80,000 Retained earnings 460,000 Total stockholders’ equity $ 1,090,000 In year 2016, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,000 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on Feb. 28 to the Feb. 5 stockholders of...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $1,100,000 Paid-in capital in...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $1,100,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 430,000 Total stockholders' equity $1,600,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $6 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28 Paid the...
Common stock—$10 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $550,000 Paid-in capital in...
Common stock—$10 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $550,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders' equity $1,070,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 4,500 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28 Paid the...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 60,000 Retained earnings 460,000 Total stockholders' equity $ 1,620,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,500 shares of its own stock at $25 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital...
Common stock—$20 par value, 100,000 shares authorized, 55,000 shares issued and outstanding $ 1,100,000 Paid-in capital in excess of par value, common stock 70,000 Retained earnings 400,000 Total stockholders' equity $ 1,570,000 In year 2017, the following transactions affected its stockholders’ equity accounts. Jan. 1 Purchased 5,000 shares of its own stock at $20 cash per share. Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record. Feb. 28...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT