Question

Borner Communications’ articles of incorporation authorized the issuance of 130 million common shares. The transactions described...

Borner Communications’ articles of incorporation authorized the issuance of 130 million common shares. The transactions described below effected changes in Borner’s outstanding shares. Prior to the transactions, Borner’s shareholders’ equity included the following:

Shareholders’ Equity ($ in millions)
Common stock, 100 million shares at $1 par $ 100
Paid-in capital—excess of par 300
Retained earnings 210


Required:
Assuming that Borner Communications retires shares it reacquires (restores their status to that of authorized but unissued shares), record the appropriate journal entry for each of the following transactions: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

1. On January 7, 2018, Borner reacquired 2 million shares at $5 per share.

2. On August 23, 2018, Borner reacquired 4 million shares at $3.50 per share.

3. On July 25, 2019, Borner sold 3 million common shares at $6 per share.

Homework Answers

Answer #1
Debit Credit
January 07,2018 Common stock 2 =2*1
Paid-in capital—excess of par 6 =2*3
Retained earnings 2
         Cash 10 =2*5
August 23,2018 Common stock 4 =4*1
Paid-in capital—excess of par 12 =4*3
       Paid-in capital—share repurchase 2
       Cash 14 =4*3.5
July 25, 2019 Cash 18 =3*6
      Common stock 3 =3*1
      Paid-in capital—excess of par 15
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