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 $460,000 of net income and the following selected transactions occurred in the order given:

a.	Issued 100,000 shares of the common stock at $61 cash per share.
b.	Reacquired 31,000 shares at $56 cash per share.
c.	Reissued 13,000 shares from treasury for $57 per share.
d.	Reissued 13,000 shares from treasury for $55 per share.

References

section breakPA11-1 Analyzing Accounting Equation Effects, Recording Journal Entries, and Preparing a Partial Balance Sheet Involving Stock Issuance and Purchase Transactions [LO 11-2]

26.

value:
0.37 points

Required information

PA11-1 Part 1

Required:
1.	Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.)

References

eBook & Resources

Accounting EquationDifficulty: 2 Medium

PA11-1 Part 1Learning Objective: 11-02 Explain and analyze common stock transactions.

Check my work

27.

value:
0.37 points

Required information

PA11-1 Part 2

2.	Prepare journal entries to record each transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Answer

Accounting Equation

	Assets			=	Liabilities	+	Shareholder's Equity
S No.	Cash	+	Non Cash Assets	=	Liab.	+	Common Stock	+	Additional Paid in Capital- Common Stock	+	Additional Paid in Capital- Treasury Stock	-	Treasury Stock
a	6,100,000						500,000		5,600,000
b	(1,736,000)												1,736,000
c	741,000										13,000		(728,000)
d	715,000										(13,000)		(728,000)
Total	5,820,000	+	-	=	-	+	500,000	+	5,600,000	+	-	-	280,000

Journal Entries

S No.		Dr. $	Cr. $
a	Cash (100,000 Shares * $61)	6,100,000
	Common Stock (100,000 Shares * $5)		500,000
	Additional Paid in Capital- Common Stock(100,000 Shares * $56)		5,600,000
	(Being common shares issued at premium)
b	Treasury Stock (31,000 Shares * $56)	1,736,000
	Cash		1,736,000
	(Being shares repurchased)
c	Cash (13,000 Shares * $57)	741,000
	Treasury Stock (13,000 Shares * $56)		728,000
	Additional Paid in Capital- Treasury Stock(13,000 Shares * $1)		13,000
	(Being treasury stock reissued at $1 premium)
d	Cash (13,000 Shares * $55)	715,000
	Additional Paid in Capital- Treasury Stock(13,000 Shares * $1)	13,000
	Treasury Stock (13,000 Shares * $56)		728,000
	(Being treasury stock reissued at $1 Discount)

Partial Balance Sheet

Shareholder’s Equity
Common Stock	500,000
Additional Paid in Capital- Common Stock	5,600,000
Additional Paid in Capital- Treasury Stock	-
	6,100,000
Treasury Stock	(280,000)
Total Share Capital	5,820,000
Add:
Retained Earnings	460,000
Total Shareholder’s Equity	6,280,000
Assets
Current Assets
Cash	5,820,000
Total Assets	5,820,000

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