Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018. March 1 Issues 64,000 additional shares of $1 par value common stock for $61 per share. May 10 Repurchases 5,900 shares of treasury stock for $64 per share. June 1 Declares a cash dividend of $1.95 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Reissues 2,950 shares of treasury stock purchased on May 10 for $69 per share. Required:

Record each of these transactions.

Answer 1

Solution:

Power Drive Corporation
Journal Entries
Date	Account Title and Explanation	Debit	Credit
01-Mar	Cash Dr (64000*$61)	$39,04,000
	To Common Stock (64000*$1)		$64,000
	To Paid in Capital in excess of Par- Common Stock		$38,40,000
10-May	Treasury Stock Dr (5900*$64)	$3,77,600
	To Cash		$3,77,600
01-Jun	Cash Dividends Dr (100000+64000-5900)*$1.95)	$3,08,295
	To Dividend payable		$3,08,295
01-Jul	Dividend Payable Dr	$3,08,295
	To Cash		$3,08,295
21-Oct	Cash Dr (2950*$69)	$2,03,550
	To Treasury Stock (2950*$64)		$1,88,800
	To Paid in capital from Treasury stock		$14,750