Question

Apr 1 Issued 6,000 common shares at $8 per share. June 15 Declared a 5% stock dividend to shareholders of record on September 5, distributable on September 20. The shares were trading for $10 a share at this time. Sep. 21 Announced a 1-for-2 reverse stock split. Shares were trading at $8 per share at the time. Nov. 1 Issued 3,000 common shares at $18 per share. Dec. 20 Repurchased 10,000 common shares for $16 per share. This was the first time Hum had repurchased its own shares.

Answer 1

Date	Account title	Debit	credit
Apr 1	cash   [6000*8]	48000
	common stock		48000
June 15	Retained earning	3000
	stock dividend distributable		3000
	[being stock dividend declared 6000*.05 = 300*10]
sep 30	stock dividend distributable	3000
	common stock [300*8]		2400
	Additional paid in capital -common stock		600
sep 21	no entry will be made ..only book adjustment will be made thereby increasing the par value from $ 8 to $ 16 (8*2) per share and decreasing the outstanding shares to 3150 shares   [(6000+300)=6300*1/2]
nov 1	cash   [3000*18]	54000
	common stock [3000*16]		48000
	additional paid in capital -common stock		6000
dec 20	Treasury stock   [10000*16]	160000
	cash		160000