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 $420,000 of net income and the following selected transactions occurred in the order given: a. Issued 120,000 shares of the common stock at $57 cash per share. b. Reacquired 27,000 shares at $52 cash per share. c. Reissued 11,000 shares from treasury for $53 per share. d. Reissued 11,000 shares from treasury for $51 per share.

	Assets = Liabilities + Stockholders’ Equity a. Cash Common Stock Additional Paid-in Capital, Common Stock b. Cash Treasury Stock c. Cash Treasury Stock Additional Paid-in Capital, Treasury Stock d. Cash Treasury Stock Additional Paid-in Capital, Treasury Stock

Prepare journal entries to record each transaction Record the issuance of 120,000 shares of common stock with a $5 par value for a price of $57 per share. 2 Record the purchase of 27,000 shares of previously issued common stock for a price of $52 per share. 3 Record the re-issuance of 11,000 shares of treasury stock previously purchased for a price of $52 per share and sold for $53 per share. 4 Record the re-issuance of 11,000 shares of treasury stock previously purchased for $52 per share and sold for $51 per share.

	Transaction General Journal Debit Credit a

Answer 1

Answer Part 1

	Assets		Amt $	Liabilities		Stockholders’ Equity		Amt $
a)	Cash : (120,000 * $57)	+	6,840,000			Common Stock (120,000 * $5)	+	600,000
						Additional Paid-in Capital (120,000* $52)	+	6,240,000
b)	Cash (27,000 * $52)	-	1,404,000			Treasury Stock	-	1,404,000
c)	Cash (11,000* $53)	+	5,83,000			Treasury Stock (11,000 * $52)	+	572,000
						Additional Paid-in Capital (11,000 * $1)	+	11,000
d)	Cash (11,000 * $51)	+	561,000			Treasury Stock (11,000 * $52)	+	572,000
						Additional Paid-in Capital (11,000 * $1)	-	11,000

Answer 2

Journal Entries

Transaction	General Journal	Debit ($)	Crdit ($)
a)	Cash	6,840,000
	Common stock		600,000
	Additional paid in capital		6,240,000
	(To record issue of common stock)
b)	Treasury stock	1,404,000
	Cash		1,404,000
	(To record acquired of treasury stock)
c)	Cash	5,83,000
	Treasury stock		5,72,000
	Additional paid in capital		11,000
	(To record re-issuance of treasury stock)
d)	Cash	5,61,000
	Additional paid in capital	11,000
	Treasury stock		5,72,000
	(To record re-issuance of treasury stock)