Question

Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp.

Great Adventures has authorized $1 par value common stock. When the company began on July 1, 2021, Tony and Suzie each purchased 10,000 shares (20,000 shares total) of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during the remainder of 2022:

November	5		Issue an additional 112,000 shares of common stock for $10 per share.
November	16		Purchase 11,200 shares of its own common stock (i.e., treasury stock) for $21 per share.
November	24		Resell 5,200 shares of treasury stock at $22 per share.
December	1		Declare a cash dividend on its common stock of $12,840 ($0.10 per share) to all stockholders of record on December 15.
December	20		Pay the cash dividend declared on December 1.
December	31		Pay $830,000 for construction of new cabins and other facilities. The entire expenditure is recorded in the Buildings account.

• Record the issue of additional 112,000 shares of common stock for $10 per share.
• Record the purchase of 11,200 shares of its own common stock (i.e., treasury stock) for $21 per share.
• Record the resale of 5,200 shares of treasury stock at $22 per share.
• Record the declaration of $12,840 ($0.10 per share) cash dividend on its common stock to all stockholders of record on December 15.
• Record the payment of cash dividend declared on Dec. 1.
• Record the payment of $830,000 for construction of new cabins and other facilities.

Answer 1

No.	Date	General Journal	Dr. ($)	Cr. ($)
1	05/11/22	cash (112000*10)	1120000
		To common stock (112000*1)		112000
		To additional paid-in capital – common stock		1008000
		(to record issuance of additional shares)
2	16/11/22	treasury stock (11200*21)	235200
		To cash		235200
		(To record purchase of own common stock)
3	24/11/22	Cash (5200*22)	114400
		To treasury stock (5200*21)		109200
		To additional paid-in capital – treasury stock		5200
		(To record the sale of treasury stock)
4	01/12/22	cash dividends	12840
		To cash dividends payable		12840
		(To record declaration of cash dividends)
5	20/12/22	cash dividends payable	12840
		To cash		12840
		(To record the payment of cash dividends)
6	31/12/22	buildings	830000
		To cash		830000
		(To record cost of new cabins and other facilities)