Question

During 2019, Road Pavement Corp. engaged in the following selected transactions:
Jan   01:	Issued 25,000 shares of $2 par value common stock at $5 per share.
Jun   15:	Re-acquired 1,000 shares of common stock sold in Jan for $4 per share.
Aug   10:	Sold 400 shares of its re-acquired common stock purchased in June for $7 per share.
Sept   30:	The Board of Directors declared and recorded a cash dividend of $0.20 per share outstanding to its share holders.
Nov   30:	Paid the cash dividend declared in September.
Dec   15:	Issued another 5,000 shares of common stock at $8 per share.
Required:
Record the Journal Entries for the above transactions: Prepare the Stockholders Equity Section of the Balance Sheet if the Retained Earnings at the end of the year has a balance of $105,000.

Answer 1

a)

Date	Account Titles	Debit	Credit
Jan. 01	Cash [25,000 shares × $5]	$125,000
	Common stock [25,000 shares × $2]		$50,000
	Paid in capital in excess of par-common stock [25,000 shares × $3]		$75,000
Jun. 15	Treasury stock	$4,000
	Cash [1,000 shares × $4]		$4,000
Aug. 10	Cash [400 shares × $7]	$2,800
	Treasury stock [400 shares × $4]		$1,600
	Paid in capital in excess of par-treasury stock [400 shares × $3]		$1,200
Sep. 30	Dividends / Retained Earnings	$4,880
	Dividends payable		$4,880
	[25,000 - 1,000 + 400] × $0.20
Nov. 30	Dividends payable	$4,880
	Cash		$4,880
Dec. 15	Cash [5,000 shares × $8]	$40,000
	Common stock [5,000 shares × $2]		$10,000
	Paid in capital in excess of par-common stock [5,000 shares × $6]		$30,000

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b)

Stockholders' Equity:
Common stock [$50000 + $10000]	$60,000
Add: Paid in capital in excess of par-common stock [$75000 + $30000]	$105,000
Add: Paid in capital in excess of par-treasury stock	$1,200
Total Paid in capital		$166,200
Retained earnings [$105000 - $4880]		$100,120
Less: Treasury stock [4000 - 1600]		($2,400)
Total stockholders' equity		$263,920