Question

At December 31, 20x3 Adair Ltd. had 600,000 shares outstanding that had been issued for $3.75...

At December 31, 20x3 Adair Ltd. had 600,000 shares outstanding that had been issued for $3.75 per share. In 20x4 the company made the following transactions: • on May 2, 150,000 shares are issued at $7.20 • on July 16, 80,000 shares are repurchased and cancelled at $5.00 • on December 15, a $0.40 per share dividend is declares

Required –

Prepare the journal entries for the 20x4 transactions.

Business   Accounting   
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Answer #1
Date Account Names Debit Credit
02-May Cash (7.2 x 150,000) $1,080,000.00
Common Stock $1,080,000.00
16-Jul Common Stock (80,000 x 4.44) $   355,200.00
Additional Paid in Capital $     44,800.00
Cash (80,000 x 5) $   400,000.00
15-Dec Retained Earnings (670,000 x 0.40) $   268,000.00
Cash $   268,000.00

Calculation of book value per share

No of Shares Value
Opening balance 600,000.00 $2,250,000.00
Issue 150,000.00 $1,080,000.00
Total 750,000.00 $3,330,000.00
Book Value Per Share $             4.44
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