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. 1.value:

	Assets		=	Liabilities		+	Stockholders’ Equity
a.	Cash	6,840,000					Common Stock	6,720,000
							Additional Paid-in Capital, Common Stock	120,000
b.	Cash	(1,404,000)					Treasury Stock	(1,404,000)
c.	Cash	583,000					Treasury Stock	572,000
							Additional Paid-in Capital, Treasury Stock	11,000
d.	Cash	561,000					Treasury Stock	550,000
							Additional Paid-in Capital, Treasury Stock	11,000

2.00 pointsRequired information Required: 1. Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.) ReferenceseBook & Resources Accounting EquationDifficulty: 2 MediumLearning Objective: 11-02 Explain and analyze common stock transactions. Check my work

2.value: 2.00 pointsRequired information 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.) ReferenceseBook & Resources General JournalDifficulty: 2 MediumLearning Objective: 11-02 Explain and analyze common stock transactions. Check my work

3.value: 2.00 pointsRequired information 3. Prepare the stockholders’ equity section of the balance sheet at December 31. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

2. In the books of Global Marine:

Transaction / Event	Account Titles	Debit	Credit
		$	$
a.	Cash	6,840,000
	Common Stock		600,000
	Additional Paid-in Capital: Common Stock		6,240,000
b.	Treasury Stock	1,404,000
	Cash		1,404,000
c.	Cash	583,000
	Treasury Stock ( 11,000 x $ 52)		572,000
	Additional Paid-In Capital : Treasury Stock		11,000
d.	Cash	561,000
	Additional Paid-In Capital: Treasury Stock	11,000
	Treasury Stock		572,000
e.	Income Summary	420,000
	Retained Earnings		420,000

3. Global Marine

Balance Sheet ( Partial)

December 31

Stockholders' Equity
Common Stock, $ 5 par 120,000 shares issued	$ 600,000
Additional Paid-In Capital: Common Stock	6,240,000
Retained Earnings	420,000
Treasury Stock, at cost ( 5,000 shares)	- 260,000
Total Stockholders' Equity	$ 7,000,000