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 $330,000 of net income and the following selected transactions occurred in the order given:

a.

Issued 120,000 shares of the common stock at $48 cash per share.

b.

Reacquired 18,000 shares at $43 cash per share.

c.

Reissued 6,500 shares from treasury for $44 per share.

d.

Reissued 6,500 shares from treasury for $42 per share.

Required:

1.

Indicate the account, amount, and direction of the effect on above transaction. (Enter any decreases to account balances with a minus sign.)

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.)

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

1
Transaction	Assets
a	Cash	+	5760000
b	Cash	-	774000
c	Cash	+	286000
d	Cash	+	273000
2
Transaction	General Journal	Debit	Credit
a	Cash 120000*48	5760000
	Common Stock 120000*5		600000
	Additional Paid-in Capital		5160000
b	Treasury Stock	774000
	Cash		774000
	18000*43
c	Cash 6500*44	286000
	Treasury Stock 6500*43		279500
	Additional Paid-in Capital 6500*1		6500
d	Cash	273000
	Additional Paid-in Capital	6500
	Treasury Stock		279500

3
GLOBAL MARINE Balance Sheet (partial) At December 31, Stockholders’ Equity
Contributed Capital:
Common Stock	600000
Additional Paid-in Capital	5160000
Total Contributed Capital	5760000
Total Contributed Capital	330000
Total	6090000
Treasury Stock at Cost	774000
Total Stockholders’ Equity	5316000