Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders' equity in 2021.

March		1		Issues 50,000 additional shares of $1 par value common stock for $47 per share.
May		10		Purchases 4,500 shares of treasury stock for $50 per share.
June		1		Declares a cash dividend of $1.25 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.)
July		1		Pays the cash dividend declared on June 1.
October		21		Resells 2,250 shares of treasury stock purchased on May 10 for $55 per share.

Answer 1

Date	Account Titles	Debit	Credit
Mar. 1	Cash	$   2,350,000		=50000*47
	Common Stock		$         50,000	=50000*1
	Paid in Capital in excess of par-common		$   2,300,000
May. 10	Treasury Stock	$      225,000
	Cash		$      225,000
Jun. 1	Retained Earnings / Cash Dividend	$      181,875		=(100000+50000-4500)*1.25
	Dividend Payable		$      181,875
Jul. 1	Dividend Payable	$      181,875
	Cash		$      181,875
Oct. 21	Cash	$      123,750		=2250*55
	Treasury Stock		$      112,500	=2250*50
	Paid in Capital from Treasury Stock		$         11,250